Google is making tons of money from its ad serving business on search, but outside of that, there is no other service that provides that much money to the Mountain View. We all know that Google maintains a lot of its services just to serve ads when you search for something: GMail, Maps, News, Google+, they’re all used to gather data on what you do and who you are to serve you the best possible ad the next time you make a search. Yes, if we put it like that it sounds extremely scary, but no, Google doesn’t care about who you are, what you do or where you live, there’s nobody there reading your emails or following you to work, Google just has machines and algorithms that figure it out by themselves and then just send you the proper ads, it’s not completely anonymous, but you don’t have to worry about anybody knowing your passwords, email and the rest.
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The main issue here is that Google need another branch of its business to start making real money, so they won’t depend exclusively on search, and that alternative might be the Play Store, if Google plays it right.
Venture capitalist Bill Gurley has written a post on how the world is moving to a mobile centric world and he notes that both Apple and Google are missing an opportunity with their respective app stores. Of course, what we really care about is Google and their future so that’s what I’ll talk about next. I should also clarify something, I’m only approaching apps, but the same could apply to music, movies, TV shows, books and magazines.
Everybody searches for everything, and most people use Google for that, that’s why Google is making so much money of search ads, it sells ad spots and then serves the best possible result to users, who are most likely to click on that ad. Companies get customers, users get the result they need and Google takes a cut, everybody is happy. Today, more and more people are using two main searches, one for the web, and one for their phones, people want apps, they want more apps, they want better apps, and as time goes by, people are more willing to pay for the app they need instead of settling with the free alternatives. If the paid app is much better than the free, then they will buy it, as simple as that.
But Google isn’t taking advantage of that search field, its Play Store search results don’t have any ads, they’re just results, and yes, I know you now hate me for suggesting this but stay with me for a second as I explain my point
Google ad serving algorithms are great, they rarely offer something that’s useless, it might not be what you want, be it still perfectly related to what you need, they’re not obnoxious ads. Even if you don’t click on them, most people see them as an extension of the same results they’re getting. So why doesn’t Google do the same to the Play Store?
If they sell a few ad spots on top of the search results, they could start making real money of the Play Store, and if they keep those spots to the minimum, like one or two, they still allow for the real natural results to be visible to the user, and even then, those ads would be perfect for what the user is looking for, they would be just allowing companies to buy the first spots on pages they were already going to appear. What’s the difference to you if when you search for something, a result is in first place, second, third or even fifth? You’re still going to look at it, you still need it and you don’t care about its location on the page, you just want the app you’re looking for, and you’re still getting exactly that.
Keeping the number of spots low is also important for developers, if there are too many paid spots, then the big guys would just purchase those and kill all those indie developers who depend on some searches to appear to users, specially the new ones who still don’t appear in featured selections or top charts. But keeping just two paid spots, leaves enough room on the page to have the indie developers appear along the rest, for every user to see.
Let’s make it clear, most companies are willing to pay to get more users/customers and Google is missing the opportunity to allow those companies to throw their money at Google, begging for top spot, and in the end, the user isn’t missing much, since their results won’t be that much affected by all of this and in some cases it might even help them discover something new.
Google already has those serving algorithms, they have all the tools to make this happen and I’m sure there’s already an internal version of the Play Store being tested somewhere with all of this already in place, I don’t think Google is ignoring this possibility. Will we ever see something like this happen? My guess is yes. When? Probably sooner than you think. How? Only Google knows, and they already proven that they know how to serve ads.