The Implications Of Siri
I was reading an article in the papers today about Google saying Siri is competition to their search business. This is something that many people have been talking about, i.e. Siri changing the paradigm for internet search etc.
In my opinion however, what Siri really threatens is Google’s advertising business.
For those unfamiliar with Google’s advertising business, Google basically has 2 products, namely Adsense and Adwords. In Adwords, advertisers bid for keywords and air their advertisement on websites that displays Google Adsense. Google decides what advertisement to display based on user’s history, keywords on that user search etc. One problem with this model is that users are searching for contents and information, not the advertisements.
In Siri however, the search is very specific. If I tell Siri I want to get a pair of shoes, Apple can throw very specific advertisements to me. The conversion rate and effectiveness of the advertisement is significantly higher because Google Adsense is very passive compared to Siri. The advertising experience become personal rather than guesswork in Google’s case.
Apple has not done targeted advertisements yet in Siri’s search results, but I think they would do so soon as Siri matures more over the next few months. When this comes, Google’s going to be in an awkward position since their main revenue source is from advertisement. Bear in mind that Facebook has already splitted a portion of the pie, so Google is going to lose more should Apple grow the advertising business.