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Summary:

Social web behavior is increasingly filling the need for a traditional search engine, but you can’t monetize the social web by transferring over search advertising. What does that mean for Google, and what are some of the most promising ways startups are filling the gap?

When you read an interesting article or visit a new web site, it’s increasingly because a friend sent you a link or mentioned it online. And when you have a question about where to eat or what to buy, you ask your contacts on Facebook or Twitter, or head to a site like Yelp or TripAdvisor to seek the wisdom of the crowd.

This kind of behavior leaves a site like Google out in the cold. Google’s monetary metrics of success still trend in the right direction, but its “search, seek, and consume” model — the core of its business — is clearly threatened by the rise in popularity of online social activities that replace search. According to Hitwise, U.S. visits to Facebook.com surpassed visits to Google.com for the first time last week (that reportedly doesn’t include non-search Google properties). The search giant is plainly feeling the heat, as as seen in its recent rushed and botched rollout of Google Buzz, and by its purchase of Aardvark, a social search company started three years ago by former employees, for a reported $50 million.

So what does that mean for web advertising? You can’t just slap something like AdWords on a social site and expect it to monetize like search. It’s with that premise in mind that I took a deeper dive into social media monetization in a feature-length story for GigaOM Pro, our premium research service (a subscription is required). After dozens of interviews with companies in the space, I highlighted areas such as affiliate advertising, incentives, real-time engagement, local marketing and advertising, native ad formats and behavioral targeting. One trend that emerged is that brand advertising is often a better fit for social networks than Google’s sweet spot of performance advertising. But we don’t have a new AdWords-type product to turn all this social activity into gold — yet.

Companies mentioned in this story: Bunchball, eXelate, Appssavy, Facebook, Twitter, Yelp, TripAdvisor, VigLink, MyLikes, Shiny Orb, Vente-Privee, Hunch, OneRiot, Foursquare, Groupon, Digg. Read the full story here.

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  1. Very good analysis and no doubt this is a big challenge for Google as users tend to go to a trusted source in this case their associates on social networking sites for information. Facebook is on the driver seat on this one where I can see them sloly takign over all aspects of activities on the net. Socialize and search on the net with a trusted source, how can you go wrong?

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  2. Very useful, thanks!
    On my site I note that the following are needed for success:

    • incorporates social media
    • offers real-time response
    • offers hyperlocal filtering
    • is available on your smartphone/mobile phone
    • must be FREE (to the end user)

    Social media is Google’s achilles heel but they have been doing a very good job I think on improving their hyperlocal options. On the other factors they rule.

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  3. They have something much better than Google’s guessed intent. For the most part they have context, i.e organized data by the user.

    They can provide information about products to their users, and provide intent to advertisers in product search and organization. Combine that with demographics and Google can keep the long tail hard to monetize search about news. I would build an ad network based on Demographics,Context and “current” behavior, make it unobtrusive and helpful and one got a winner. While Google can only offer “current” behavior to their advertisers. Which ad network would they choose?

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  4. Google has to buy their way into the market. There is not a second approach.

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  5. when is Google going to stop embarrassing themselves in the social space?!

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  6. So I guess what you have missed out is that the Google algorithm inherently factors in social behavior, so the linking behavior is nothing but a ‘vote’.

    Again, when it comes to depending on your own circle for info – thats technically a different market and in no way threatens Google.

    So in summary – an algo has to beat Google, no army of social concepts will.

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  7. There is definitely a growing dependence on social media to get information. With economies worldwide still unstable, there is less trust overall in information that comes from unknown sources (i.e. searches provided by Google). People would rather hear it from people they trust, hence the social media boom, which can be monetised. With shortened URL technology, like the one provided by SkimKit, you can make money from your social media by putting shortened affiliate links into your Twitter streams, facebook posts, blogs, and emails and shout out recommendations to your audience. I’ve also noticed Google has seemed to start favouring social media search results with microformats, and I wouldn’t be surprised if more effort is done on Google’s part to increase the presence of social media search results.

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  8. Best think you can ever do online is to promote good ideas.

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  9. [...] million users. And the fact is Facebook’s monetization engine is at its most powerful when it understands user intent, something that’s increasingly precise and real-time due to the company’s work across [...]

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