Google announced on October 17th local time that Prabhakar Raghavan, the senior executive responsible for search engine and advertising products, will step down after leading the company's core profitable business for four years and take on the new position of Chief Technology Officer. Nick Fox, a senior executive at Google who has been working in the search department for a long time, will replace Raghavan.
Market research firm eMarketer predicts that Google's search advertising market share in the United States will fall below 50% next year, marking the first time in over a decade. Emerging competitors such as TikTok, Amazon, and artificial intelligence startup Perplexity are seizing market share. This change marks a significant challenge to Google's long-standing dominant position in this nearly $300 billion market.
Paid search advertising faces multiple challenges from generative AI, social media, and retail media, as well as consumer resistance to advertising. Skai data shows that although paid search advertising spending increased by 4% year-on-year in the fourth quarter of 2023, ad impressions decreased by 15% and click through rates decreased by 8%. However, Google still holds a 91.02% share in the global search market. Meanwhile, the cost per click (CPC) of retail media search advertising is higher than that of traditional search advertising. According to eMarketer's estimate, the CPC of retail media search advertising in the third quarter of 2024 was $1.32, while the CPC of overall search advertising was $1.10. Amazon's search ad CPC is higher at $1.50. Amazon's search advertising revenue in the United States is growing faster than Google's, with an expected growth rate of 17.6% this year, compared to Google's 7.6%. In the total search advertising expenditure in the United States, Amazon will increase to 22.3%, while Google will decrease to 50.5%.
The rapid development of artificial intelligence is also changing the landscape of search advertising. Google recently announced that it will insert ads into its newly launched AI search, starting with mobile search. Google stated that these will directly answer users' queries and display relevant advertisements. For example, when a user searches for "how to remove grass stains on jeans," Google may display Albertsons' Tide pen advertisement. This transformation is not only to meet user needs, but also to provide advertisers with new advertising channels.
With the emergence of these new competitors, Google's dominant position in the search advertising market may face greater challenges. In the future, advertisers may be forced to advertise on multiple platforms to ensure that their ads reach more users. All of this indicates that the search advertising market is undergoing a profound transformation.
Raghavan is also responsible for a range of Google products, including Google Voice Assistant, Maps, Business, and Payment Services. He was once considered a candidate for the next CEO of the company.
In addition to search engines and advertising products, Fox will also take over multiple other businesses led by Raghavan, further consolidating its position within the company. It is worth noting that the Gemini chatbot team will not be directly managed by Fox, but will be transferred to DeepMind, Google's artificial intelligence research division.
Behind this personnel change, it is widely believed that it is an important layout of Google's senior management for the future leadership. Raghavan was once seen as one of the strong contenders for Google's next CEO, and Fox's promotion undoubtedly increased his chances of becoming Pichai's successor. Pichai is not only the CEO of Google, but also the CEO of the parent company Alphabet.