According to report from The Motley Fool, Google Maps could be become the next big growth driver, after YouTube, of the search engine company’s ad revenue. The Alphabet Inc (NASDAQ:GOOGL) subsidiary has become the biggest digital advertising company in the world, with its advertising revenues growing 18% year-over-year in the third quarter. Analysts at Baird believe that Google Maps will generate $5 billion in revenue for the search company by 2020. Maps are expected to be the next big product after YouTube, from where a growing percentage of the company’s revenue is coming from.
How Google Plans To Monetize Maps
During the third-quarter earnings call, Google CEO Sundar Pichai talked about Google’s monetization strategy for Maps. In response to a questions from JPMorgan’s Douglas Anmuth about how the company plans to sell more advertising on Maps, Pichai said Maps is closely tied with local search on mobile.
“Today, a big part of what you’re seeing with our transition to mobile that’s working really well. The reason Mobile Search and mobile monetization works really well for us is because a lot of it is inherently local by nature. And the thing which helps us deliver a great local search experience is Maps,” the CEO said.
When it comes to monetizing local searches and Maps, it’s really about “enhancing the local search experience,” Pichai said, adding “we want it to be a great experience for consumers as Google Maps, but in terms of also really enhancing the local search experience.”
“I think you’ll continue to see us pursue it that way. And over time, to the extent there are opportunities to create value within the application itself, we’ll pursue that as well,” Pichai added.
Google allows businesses to buy Promoted Pins, which display businesses – restaurants or gas stations –along their routes. The company could move into local restaurant and business advertising for when users search for generic places such as “Mexican food” or “grocery store.” In this way, Google would better compete with local search players such as Yelp, which made $580 million in local ad revenue over the previous four quarters. “With over 10 times the traffic (Maps has 1 billion global users), the opportunity is even bigger for Maps,” according to the report.
How Could Google Add Value To Maps
In addition to monetizing Maps, the Alphabet Inc (NASDAQ:GOOGL) subsidiary could add value Maps through strategic partnerships, according to The Motley Fool.
Google, for example, could work with Uber and other taxi services and add them to its app, along with estimates as to how much a ride will cost. In addition, the search engine giant could integrate services such as food delivery or reservations into Maps to both enhance and monetize the product, according to the report.
Investors should be looking Google to move into more partnerships or launch its own services within Maps. Analysts at Morgan Stanley believe its advertisements could generate an additional $1.5 billion for Google next year. In order to generate $5 billion, which is predicted by Baird analysts, predict, Google has to do more than just to display ads.
In other news, the Alphabet Inc (NASDAQ:GOOGL) recently acquired a startup to turn its huge image search database into a source of revenue. The search engine company unveiled shopping ads on image search in May, ahead of its annual I/O developer conference.