How Long Can Google Keep Its Catbird Seat in Online Advertising?

"Sorry, I have no idea but I can do some googling for you." 

As the word "googling" has been taken into dictionary, it is easy to predict the huge market shares of Goggle in web search. Thanks to the powerful search engine and rich database, Google remains undisputed leader in digital advertising field through targeting consumers with the simple but effective text ads. However, in recent years, Facebook has performed quite well in social media advertising, Bing seems to come up as a serious player in search engine battlefield and more alternatives are provided for advertisers in the market. How long can Google keep its catbird seat in online advertising?

It is undeniable that Facebook outperforms Google in display ad category with its strong relevancy and personalization. As is shown by ADI, Facebook's display click-through rates (CTRs) is up 35%, 10% higher than that of Google. It is demonstrated that Facebook's display ads are more relevant than Google's and thus surely it will attract more marketers and advertisers. 

Now, Facebook is testing new ad forms, allowing Facebook users to see the details of products on Facebook pages rather than direct them to the websites of the companies. In this way, Facebook attempts to keep users stay on the page by helping them get rid of the slow-loading sites. 

According to Morgan Stanley, from 2012 to 2014, the share of display online advertising kept growing while the search marketing, the edge of Google, was shrinking. And it is projected that the U.S. digital display ad market share of Facebook will rise by 3.1% from 23.8% to 26.9%, while the share of Google will dip 2.6%, from 13.7% to 11.1%.

As a new entrant, compared to Google, to digital display ad market, Facebook is likely to eat away more Google's slice of market share.

Since Google AdWords is no longer a cost-effective tool for small businesses or startups as it used to be in the beginning, small businesses have to drop a lot to drive traffic. Due to the low return on investment (ROI), small businesses or startups are turning to other lower costing solutions, like Bing Ads. 

Based on eMarketer, it is shown that Being outperformed Google in terms of the paid search spend growth in regions around the world except North America. Plus, on the basis of statistics from StatCounter, Google's search share is shrinking in these years and fell below 75% in U.S. for the first time in January. While its competitors, like Bing and Yahoo have been witnessed a trend of growth, reaching 12.4% and 10.9% respectively by January 2015. 

Faced with the growing bargaining power of substitutes, Google expects to return to China market in this fall following a five-year absence. Besides the large scale of 6490 million Internet users in China, the support of national policy in Internet industry which helps boost the digital economy in China, also attracts Google to re-enter the market. However, it is difficult to say whether its strategy will work or not in Chinese ecosystem, which is a complicated and closed one.

Apart from going  for display advertising and search engine marketing (SEO), marketers can also do search engine optimization (SEO), social media marketing or email marketing by themselves. As increasingly more choices are provided for advertisers and marketers, the charm of Google may encounter a drop. 

According to eMarketer, the worldwide digital ad market shares of Google just increased 0.2% from 2012 to 2014. Meanwhile, Facebook along with Twitter and other smaller players are eating away Google's slice of digital ad revenues in display advertising. It is projected that Google's total digital ad market shares will shrink from 41.6% to 35.4% in U.S. market. 

Admittedly, Google still remains in the catbird seat in online advertising, but faced with the growing bargaining power of new entrants, substitutes and buyers, Google is under pressure now. Can it bring us another impressive innovative as it used to do with AdWords or come up with any strategy to keep the throne?  Let's wait and see.