Google has been prepping a slew of new products for the limelight and after slowly and (probably) intentionally leaking those over time, it made the official announcement on October 4th.
New products include a pair of Pixel smartphones, Google Home smart speaker, Daydream VR set, Google Wi-Fi router, and a higher-definition Chromecast streaming dongle.
Something to note right off the bat is that the products themselves don’t offer new functionality for the consumer. In fact, they overtly mirror the utility offered by comparable products in the market, most notably Apple’s gold standard iPhone and Amazon’s wildly popular Echo platform.
So what’s the motivation?
Extend the search experience to new channels
Google’s first (literally) cardboard VR experience was available for just $15. Now Google is upping the ante with a still very affordable $79 Daydream View headset custom tailored to Pixel devices.
Turnkey advertising solutions won’t exist here out of the gate, so brand opportunities will revolve around content.
Imagine a relatively seamless transition from a Google search for say, “St. Regis Princeville,” to a branded 360-degree VR experience on YouTube. It is exciting to dream up what the consideration phase will look like in another five years as brands begin to sponsor content creation in new, widely adopted formats.
Voice search is becoming less of a fad and more of a simple reality. 20% of searches are already driven by voice commands. Google has already begun developing AdWords reporting to share voice search performance data with advertisers.
However, Google Home isn’t only about monetizing more search queries, but building new pathways to capture search intent.
Google Home will answer basic questions about the weather, the presidential debate schedule, or the number of quarts in a gallon, but we should consider more unique extensions – such as integrations with Google Express, Google Maps, or Uber to reduce friction on local purchase intent.
Diversification away from search ads
We are nowhere near peak-Google. CPCs are remarkably flat while ad inventory continues to increase. Google can still offer advertisers more paid clicks for low or no marginal cost, but continues to grow its own revenue aggressively.
Everyone is still invited to the paid search party; more paid clicks are coming from new ad formats and more ad slots across Google properties.
That said, opportunities to drive new search ad revenue are not infinite. It is undeniable that Google is trying hard to find a niche outside of search. Right now, none of its ‘other bets’ can rival its ad sales. In fact, they are really good at bleeding money and creating shareholder anxiety.
Google will always have a strong ad sales organization, but long term growth depends on non-advertising revenue streams. Smart devices powering smarter homes isn’t a moonshot like self-driving cars, but it’s far more aligned to Google’s core value proposition of offering solutions to consumers’ rapidly evolving needs.
Bridging mobile search to consumer electronics
Everyone knows that Google wants to win at mobile. Mobile search accounts for a strong majority of Google search traffic and Google’s own AdWords platform was an early adopter of a mobile-first mentality.
Google must be looking over its shoulder at Facebook’s astonishing 84% mobile share of ad revenue and wondering how to become a larger piece of the user’s mindshare.
Google’s suite of free apps and services like Gmail, Google Drive, Chrome, Docs, and YouTube has long been subsidized by advertising revenue and made available to consumers in a device-agnostic way. Google’s Nexus line was moderately priced to increase accessibility.
The question is: Can moving away from Nexus to offer a premium device with competitive tech specs make a compelling enough case for consumers to buy Pixels?
Based on what we know now, the Google brand itself is the mechanism being asked to mobilize an audience large enough to carry a new standalone consumer electronics offering to heights it hasn’t been able to achieve with Nexus.
As marketers, it’s our job to understand macro trends and potential impact on advertising channels that may represent opportunities for our clients. After reflecting on Google’s largest product announcement ever, it is clear that Google is going all-in on the smart home.
Consumers are more likely than ever to start the purchase journey on Amazon versus a search engine. Both Apple and Amazon are using Bing search results for voice searches coming through their devices. Google Home is a strong signal that Google doesn’t think it can’t win in voice search with Android powered devices alone.
Amidst significant challenges from competitors, Google’s success in the smart home will depend on its ability to build new and innovative connections for the consumer. The quality of these executions have the potential to differentiate Google Home from other smart speakers in a material way.
Tom Murphy is Associate Director of Performance Media at DigitasLBi.