SmoothSpan Blog

For Executives, Entrepreneurs, and other Digerati who need to know about SaaS and Web 2.0.

Archive for November 8th, 2007

Facebook Gets ‘Em Interested, But Google Closes the Sale

Posted by Bob Warfield on November 8, 2007

I’ve been pondering the new Facebook ad dynamic.  It has excited two polarized mirror image camps:

One gang argues Facebooks new model is so much better that Google is (or should be) running around in fear of losing it’s online advertising monopoly.  This group speaks of how much more targeted advertising can be when it draws on the Profile and Friends information of a Social Network as well as the data e-tailers will bring back to Facebook under the new model.  The other side argues that all this cross referencing of personal information is creepy, and that most people don’t want to endorse most products to their friends.

There’s been a lot of clever writing on it.  Nick Carr’s rather sarcastic piece on “Social Graft” had me chuckling.  But, online advertising is a complex subject, and I haven’t yet seen enough deep thinking about it.  It all sounds good on paper, but keep in mind that your exact mindset at the moment you are presented with an ad says a lot about what you will do.  Some elements of the mindset are long term: many people just don’t click banner ads ever.  Some are medium term:  “I just had a baby, I need to buy a lot of baby stuff until my baby is a toddler.”  Some are unpredictable and spur of the moment, “Doh, I forgot my anniversary is in a week, what to buy?”

Google is so strong at online advertising because they own what one wag (I’ve forgotten who) called the “front door to the web”.  People navigate the web largely using search engines.  Metaphorically, Google waits until you are in your car and headed out to a store.  In fact, it waits to see which store you are going to.  At the last minute, before you walk into the store, it slaps a sign on the store’s front entry that offers you a chance at what you are going there to buy from somewhere else.  Painlessly.  Instantly.  That’s a pretty good algorithm for dealing with the mindset issue and it explains why search is such a powerful advertising franchise.  As a secondary franchise, Google makes it easy for every “non-profit” you visit that isn’t selling you products to be “sponsored” by folks who are and to target the sponsors as people you might be interested in based on the content of the “non-profit” page you’re visiting.  It’s less direct in terms of intent, but at least they know you’re interested in the page you are on.

Facebook is going to experiment with other analogs.  “I might buy one because a friend bought one and likes it.”  Yes, that’s a good one.  We all do that.  Tell me, do you always buy exactly what a friend bought, or do you research things a little bit with your search centered around your friend’s purchase?  Do you buy softdrinks directly from Coke, or do you go to the local store?  If you follow either of the latter patterns, it means you won’t buy clicking through the friend’s recommendation at Facebook, you will simply note it and use it as the basis of a search on Google.  So Google wins again because Facebook got you interested in searching, but Google actually closed the sale.

Note that it isn’t quite a zero sum game.  You may clickthrough on Facebook to learn more, in which case they get paid.  But if you still do research (who has the best price?) on Google, they win too.  In this sense, unless Facebook succeeds in eliminating the desire to research a choice further, or unless they can own that research process, Facebook actually is additive to Google’s franchise, as are other Social Networks.

Google doesn’t care where you got your appetite.  They just want you to consult with them before you sit down to eat.

Posted in saas | 1 Comment »

%d bloggers like this: