Google became the world’s most profitable internet company on the back of search advertising. Now, it’s turning another popular web service into a major cash machine.
Google Maps is an indispensable part of life for more than 1 billion people, who use it to commute, explore new cities or find a hot new restaurant. The service has been mostly free, and free from ads, since it launched 14 years ago.
Interviews with Google executives and customers show this is changing as the internet giant increases the ways advertisers can reach Maps users, while raising prices for some businesses that use the underlying technology. The app now regularly highlights sponsored locations, and shows extra paid listings when people look for nearby gas stations, coffee shops or other businesses.
"There’s a big opportunity for them to ramp up monetization," said Andy Taylor, associate director of research at digital marketing agency Merkle. "They’ve been slow-playing it."
The search business is still immensely profitable and growing, but that can’t last forever. More people are searching via Amazon.com Inc. And on mobile devices, Google has already crammed the top of search results with ads, leaving less room for more commercial spots. In comparison, Maps feels like new territory primed for Google’s ad systems to start pumping dollars from what is a giant, untapped data well.
"Sometimes I say the most under-monetized asset that I cover is Google Maps," Brian Nowak, an analyst at Morgan Stanley, said while interviewing Google’s business chief Philipp Schindler at a recent conference. "It’s almost like a utility where it’s kind of waiting for you to flip the switch on."
Schindler’s response showed that Google isn’t waiting anymore. He sliced the opportunity in four areas. Basic directions are a "utility" that can’t be messed with much. Second are requests for things nearby; followed by broader, personalized recommendations; and finally searching neighborhood business listings.
"If you think about Maps monetization from those four different angles -- a little bit more caution obviously on the first one, not disrupting the utility aspect and all the other three -- I think it’s a really, really interesting playground going forward," Schindler said.
There’s also a chance this Maps initiative steers Google into regulatory roadblocks that are growing every day. Europe has pounded the company for violating competition law, and there are rising calls in the U.S. for regulating Google’s data collection, privacy standards and ads business. Milking more money from Maps -- where millions of people share personal information daily -- could invite even more scrutiny.
Along with data gleaned from other Google services, the company knows where you live and work, the bars and restaurants you frequent, and what your interests are. Tap on the "For you" tab on the bottom of the Map app’s launch page and it might suggest a vegan bakery, while saying "you seem interested in vegetarian."