Facebook vs Google

Facebook gets is revenue from advertising just like Google does, but at a much smaller scale. For 2010 it's estimated that Facebook earned just under $2B in ad revenue, but Google earns that much every month. Both sites are extremely popular in terms of visits and usage, and since each offers different capabilities, people will probably continue to use both. So how will Facebook ever exceed Google's ad revenue?

google_facebook.png
The key to target-advertising is to match the right ads to the right people. Google uses the data they collect from searches and users traversing sites to increase the likelihood of a good match, which is confirmed by a click-through. Said another way, Google has figured out how to show people the ads that interest them most. Much of this success was led by Sheryl Sandberg, the former VP of Global Online Sales and Operations at Google.

In 2008 Sheryl Sandberg moved to Facebook to work for Mark Zuckerberg as COO with the same goal in mind. However, this time there's much more information to leverage to match ads to people. Using people's social graph, or the connections like-minded people keep, there's a huge opportunity to better focus ads and increase click-through rates. But how?

Two other cash-generating juggernauts of the decade both have their roots in social media. Groupon enables group buying at a discount. After a predetermined number of people agree to the terms of a coupon, the coupon is activated. Deals are shared among friends to ensure activation. Zynga produces popular Facebook games like Farmville and Mafia Wars, where people rely on friends to help them achieve in-game goals.

If we take some of the concepts from Groupon and Zynga and use them for advertising on Facebook, there might just be a killer-app. Facebook's forthcoming "buy with friends" program seems to be on the right track. According to Forbes, users can unlock deals then share their purchase with friends via their newsfeed. Then friends can also take advantage and push the offer along their social graph.

I can envision deals that require X number of Likes (e.g. Walmart's Crowd Savers), or are available only to the first 100 people (e.g. The Gap's free jeans). Perhaps a coupon's value increases 1% for every unique 1000 wall postings, encouraging people to share. These goals can add excitement to the shopping experience and garner greater attention from shoppers.

In the battle between Google and Facebook both will be winners, but because Facebook has access to more information about individuals, it will eventually take the lead in the online advertising space. Buy with Friends is one more step in the right direction.

Comments:

Facebook has a long way to go before it could match Google's strength. However, I agree that having access to personal info of individuals does have its advantages.

I just don't see how Facebook can be used on a more commercial basis because people use Facebook to interact with friends. They don't come with the intention to buy. With Google, this is a different story. In order to buy stuff online, you need search for it and Google is the best platform to search and later, buy. That is the reason advertisers will find Google more appealing and lucrative at this present time.

Posted by seo consultant on January 28, 2011 at 03:47 PM CST #

Great point on intent. There are still lots of opportunities to discover products from friends, so both will do well.

Posted by David Dorf on January 29, 2011 at 04:17 AM CST #

Interesting post David. And given that Google is currently struggling to come up to terms with content farms and spam results, FB might just be stumbling onto a goldmine here.

The following articles, I am sure you would have read them, point out to exactly this. People may choose social media for more meaningful searches - as they are more trusting of people they know, people who are in their network or at least their friend's network.

http://voices.washingtonpost.com/blog-post/2011/01/is_google_getting_less_reliabl.html?sid=ST2011012804185

http://www.washingtonpost.com/wp-dyn/content/article/2011/01/28/AR2011012803849.html

Posted by Shankar on January 30, 2011 at 08:16 PM CST #

Shankar, for sure people trust their network more than unfiltered search results. The content-farm business is hurting Google, but I imagine they will find a way to better filter those results soon. The bigger problem for Google is the fact that Facebook could embed a search engine on par with Google. Then we might have few reasons to ever the leave the Facebook site. In some respects, Facebook could become the internet much like AOL used to be.

Posted by David on January 30, 2011 at 11:42 PM CST #

I think Facebook should really start to gain the advantage over google in the next 5 years as they can advertise to peoples personal statuses also most businesses have a facebook page even if they are not ranking high in google searches - facebook ads will always go to the right people!

Posted by daniel on February 13, 2011 at 08:47 AM CST #

When I ask around my friends, almost everyone has a FB account! It is undeniable FB is popular.

When you want to know the status of your friends, Facebook him/her! This is the current trend...

Big G need to have a major breakthrough to snap back its share from FB.

Posted by Ming Jong Tey on February 13, 2011 at 11:09 AM CST #

I agree that targeting ads is much easier on Facebook. target by age, demographics, interests, birthday, marital status. Google has some great targeting capabilities also. Personally I like Facebook Ads and the specific targeting I can get.
Where people go on line, the search engine they use and where they get their email changes over time. It is hard to say who will have mind share in 10 years let alone 3 years.
Google has social search and it is pretty cool.
I expect location services to grow and the search engine that works the best on mobile phones to win in the next decade. This will also be impacted who has the market share of the phone market as they can decide on the default search engine for their phone.

Posted by Clay Franklin on February 13, 2011 at 12:09 PM CST #

Your article about how this is evolving and the mention of Grouon reminded me of a consulting client I had about 6 years ago in an educational niche. I pitched them on doing something like what Groupon's doing now, but with memberships. Viral marketing combined with a monthly membership fee that keeps lowering (to a point) as more members come on board was a decent idea if you looked at it as a loss-leader to get people into a back-end.

They couldn't let go of thinking they were losing money on the initial membership - even when I worked out the back end exponential profits.

Now with Facebook's better ad targeting connected directly with exposure to social contacts (potential new members), maybe it's time to revisit that idea. No wonder Google wants a piece of that social advertising pie.

Posted by Vincent Kernaghan on February 13, 2011 at 12:27 PM CST #

I just started to use facebook to market my business not too long ago, and I am glad with the result so far.

I mean, beside the right target people that you're getting from your campaigns, it's also not complicate at all to set up.

And best thing about it, your target customers can become your loyal customers (most likely your friends)

Regards,
Dev

Posted by Dev blog on February 13, 2011 at 01:11 PM CST #

Yes! The results have exceeded my expectations.
Wondering now why I procrastinated for over a year to incorporate Facebook: into my marketing portfolio vehicle. The old habits....!

Posted by GenF20 on February 13, 2011 at 07:01 PM CST #

Hi, I'm new to all this social stuff and being at little older than most people I know using FB, can't find the time to use it. I see the marketing benefits of targeting sure, at the moment - but do you think we'll all become blind to it again - like email? My mobiles becoming a pain in the rear as well with sms marketing. Information overload will soon be taken over by 'adverload'

Posted by Terry on February 13, 2011 at 10:31 PM CST #

Personally I think people will “suck it up” for a while but there a lot of fledgling social sites waiting in the wings for FB to stumble. Just as Myspace took a back seat to FB too much advertising might just boot FB off the top of the heap in the long run.

Posted by Dynatorch on February 14, 2011 at 05:24 AM CST #

Looks like facebook is going to take a big bite on Google's share of ad revenue. Surely social interaction data makes targeted ads more accurate and effective hence generating best conversion. A big difference between Google and facebook can be pictured on the platform of ethics. Google as a search engine helps people find out what they are looking for. Facebook on the other hand, has loads of fake users, is open to bully, identity theft, privacy problems and the list goes on. Most of the likes are either bought or can be generated by fake IPs and fake IDs! Facebook itself is accused several times of stealing user data to feed its ad targeting mechanism. Shouldn't these issues be addressed?

Posted by guest on July 11, 2012 at 03:35 AM CDT #

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David Dorf, Sr Director Technology Strategy for Oracle Retail, shares news and ideas about the retail industry with a focus on innovation and emerging technologies.


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