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Despite repeated attempts such as Buzz and Wave (which it recently shut down), Google (s goog) has so far failed to make much headway in the world of social networking. The inability to do so is becoming a bigger and bigger issue for the web giant, particularly since Facebook continues to grow at a rapid rate — it recently crossed the 500-million-user mark — and is becoming increasingly more attractive to the advertisers Google also covets. Judging by its recent behavior, including a series of deals such as the purchase of Slide and the reported purchase of virtual-goods payment company Jambool, the search company appears to be banking on a social network based around games as a way of competing in that space.
The rapid growth of social networks such as Facebook and Twitter shows that Internet users want to socialize, whether by posting status updates and photos, or by playing social games such as FarmVille or Mafia Wars, or checking news reports and commentary on Twitter. According to a recent study, the average American user of the Internet spends more than a third of their time on social networks. Google’s problem is that it doesn’t have a major stake in either social networking or casual gaming. There are social games that can be embedded in iGoogle pages, but they are relatively unsophisticated and haven’t gotten a lot of traction so far, and both Wave and Buzz have also failed to capture much attention from users (Google recently announced it is shutting down Wave due to lack of interest).
The big problem for Google is that advertisers go where the users are, and those users are spending more and more time on social networks. Advertisers also seem to be increasingly interested in the ability that social networks like Facebook have to target users based on their age, sex, marital status and other demographic characteristics. Google gets hundreds of millions of users doing searches every day, and has made billions of dollars by targeting ads at them based on what they’re searching for. But as Om has pointed out, the potential for targeting or reaching users based on their social-networking activity is a competitive threat for the search giant, and responding to that threat is something Google seemingly has no handle on, judging by its recent behavior.
Google’s failure to develop much in the way of social networking features or services appears to be a result of its corporate DNA. The company is driven predominantly by engineers, who according to many reports, don’t really understand or appreciate the value of social networking. Former staffers have said the company is very good at analyzing and responding to issues that involve technical software requirements, but isn’t nearly as good at recognizing what drives human social behavior. Google has appointed a “head of social” to help them grapple with this problem, but the Google exec is going to have a mountain to climb in terms of developing the social element at the company.
For more on the challenges confronting Google as it tries to improve its social networking offerings, and the potential benefits of doing so, please see the GigaOM Pro report I wrote on the topic (subscription required).