When Social Replaces Search, What Can You Do to Monetize?

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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