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Why is Google losing mobile search share to mobile apps?

Puneet Sikka

Why investors can expect the mobile search market to grow fast (Part 3 of 5)

(Continued from Part 2)

Mobile apps are becoming an important way to search for information

In the prior parts of this series, we discussed some of the factors helping and hindering mobile search market growth. Mobile search is becoming an important component of the overall mobile advertising market as well. According to eMarketer, in 2014, U.S. mobile search spending at $9.02 billion will account for more than half of the overall U.S. mobile advertising market at $17.73 billion. According to the same report and as the chart below shows, Google’s (GOOG) share of mobile search ad spending should decline from 82.8% in 2012 to 65.7% in 2014 as mobile apps become an increasingly important way to search for information.

The report also mentioned that other mobile apps, such as Microsoft (MSFT) Bing, Yahoo (YHOO), Amazon (AMZN), Kayak, Indeed, and Shazam (reflected in the “Others” category in the chart below), are increasingly popular search options, which is why Google is losing share in the mobile search market. Yelp (YELP) was another notable inclusion in the list, and it’s expected to gain share rapidly, from 0.5% in 2012 to 1.3% in 2014.

Browser on mobile is just one of the apps in a sea of apps

Compared to a PC, today, users have more options to search for information on mobile devices through apps. For a PC, browsers play an important role in searches, but on mobile devices, browsers are just one app in a sea of apps. Users find it more convenient to search for information directly through an app, which explains their increasing usage and Google’s declining usage.

According to Cathy Boyle, senior analyst for mobile devices at eMarketer, “Even though browser-based search is a common behavior among mobile owners, search engines are not necessarily the first place smartphone and tablet users turn. The explosion of mobile app development and usage means mobile users have more—and more specialized—alternatives for finding information.”

Continue to Part 4

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