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Why Is Google Suddenly Advertising So Much?

When Google (GOOG) CEO Eric Schmidt said 200,000 Android mobile phone operating systems are activated every day, giving the search company more new mobile users than Apple (AAPL)'s iPhone, you'd be forgiven for thinking that the company must be enjoying this period of new-found dominance. It was only a few weeks ago that we were talking about how Apple's new iPad and its iAd system could drive Google into the wilderness currently occupied by Yahoo! (YHOO).

But there's reason to believe that Google is actually rather anxious about its fortunes: It continues to churn out new commercials for its bedrock offering, the Google search engine.

At first, this was baffling to me. Is there really anybody on the planet who doesn't yet know what Google is? And didn't Google famously refuse to advertise its services for years, relying on word-of-mouth? Yet here on Google's Search Stories YouTube page are 17 different commercials, including the "Parisian Love" spot than ran during the Super Bowl. Why would anyone need to be reminded through a vehicle as clunky as an ad that Google exists?

One possible answer is that Google's empire is based almost entirely on its ability to sell ads next to search results, including on Android phones, and that empire is by no means a guaranteed thing.

First, it's worth noting that Google's share of search engine users is being chipped away by Microsoft (MSFT)'s Bing, an astonishing indicator that there's life in the Redmond giant yet:

Bing still handles a small slice of Web searches in the United States, 12.7 percent in June, compared with Google's 62.6 percent, as measured by comScore, the Web analytics firm. But Bing's share has been growing, as has Yahoo's, while Google's has been shrinking.
And Bing has gained this share by doing some pretty simple and inexpensive things, such as using brightly colored photos for the screen background and offering different ways to organize search results down the side menus. This sounds rather trivial except ... girls and women love it. Not everyone enjoys hunting and pecking like a geek through pages of black-and-blue link text, it seems.

In response, Google has recently been copying Bing -- by offering a single page for image searches, for instance -- to keep up. Again, for those of you who just fell off your chairs: Google has been copying Microsoft to keep up.

Second, Google gives away Android for free in exchange for taking a slice of any advertising money spent through Google ads on Android phones. My BNET colleague Erik Sherman calculates that this is already a nice little business for Google. That looks like a position of strength too, but again, barriers to entry on Android are low and Google has some reasons to worry: Motorola (MOT) has already made Bing the default search engine on its Android phones in China following Google's dispute with the government there. You can make Bing the default on your own Android phone if you prefer it.

While Bing won't put Google out of business anytime soon, there are clearly no guarantees that Google will always dominate search online and on mobile devices. And Google's stock is extremely sensitive to its share of search requests.

Which is why, every time you see a Google commercial, you should think to yourself, the folks at Mountain View are worried about something.


Image by Flickr user Charles Haynes, CC.