Tag: facebook

  • The Coming Social Advertising Revolution

    Facebook has over 400 million active users and members spend over 951 man-years on the site each month. Facebook is passing Google this year as the most visited site in the US and is going to earn somewhere between $710M and $1.1B in revenue this year.

    Google on the other hand have a $27B revenue run rate for 2010 [based on Q1 2010 earnings]. With similar on-site traffic they are doing 25 times Facebook’s revenue. Google have had a long time to learn about printing money efficiently, but even so that’s a blush-worthy statistic for the Facebook executive team. So why the difference in performance?

    Facebook has a crisis of intent. When a visitor signs in to Facebook their intent is to socialize. They don’t want to buy anything and they certainly don’t want to click on ads that lead them to buying something. Facebook has the best data on the web about the people using their service. But all that wonderful data is useless without intent.

    When a visitor hits Google their intent is to see something, learn something, do something etc and these can be cajoled into buying decisions. If Google guides the user to the right vendor, they make a vendor money and can share in some of the revenue. Google’s data on each visitor pales in comparison to Facebook. But Google catches each visitor at the moment they have intent. And that is the power of the search business.

    Facebook needs to solve their crisis of intent. Intent is the missing ingredient that stands between Facebook and $27 Billion in revenue multiplied by the social graph and profile data that Google doesn’t have.

    Changing Facebook.com to capture visitor attention when they have buying intent risks destroying a valuable asset. So instead Facebook have decided to take their data to the places where visitors have intent: The rest of the web.

    “If intent won’t come to Facebook, we’ll take Facebook to intent.” ~Mark Zuckerburg [may have said this]

    In the next 3 to 12 months Facebook are going to roll out their own ad network for publishers – a direct competitor to Google AdSense.

    If Facebook can use my interests, sex, age, location, who I’m friends with and their age, location, interests etc. to infer that when I’m searching for a ‘bobbin’ it’s probably because I want to tie steelhead flies with it, then it makes more sense for every publisher on the web to use Facebook’s ad network than Google or anyone else because they will simply make more money.

    Facebook’s Ad Network will make publishers more money and increase engagement.

    Facebook Connect was phase 1: “Lets see if a distributed Facebook gets traction and doesn’t raise privacy flags.” It was a resounding success.

    The Social Web and Open Graph is phase 2: “Lets see if we can share some user data using an opt-out model.” From the Facebook blog: “For example, now if you’re logged into Facebook and go to Pandora for the first time, it can immediately start playing songs from bands you’ve liked across the web.”

    There have been the usual privacy rumblings, but so far the Facebook community seems to be OK with an opt-out model of distributed data sharing.

    The significance of this is staggering: Facebook have positioned themselves for the perfect AdSense kill-shot. 6 to 12 months from now publishers will  be able to integrate Facebook’s applications and ad network on their blog or website and get:

    • Better revenue than Google AdSense or any other ad network due to better targeting
    • Increased user engagement through social features
    • Increased virality through recruiting other Facebook members
    • Increased data on each visitor from their very first pageview reducing bounce.

    Advertisers will get:

    • Less click fraud because you’re no longer just an IP address and a cookie.
    • Better targeting including the holy grail of demographics: Age, Sex, Location.
    • Ability to show your ad at the moment a user has buying intent on a search engine, a blog about visiting Egypt, etc.

    A significant portion of Google’s $27 Billion in revenue this year will come from their publisher ad network. Google knows what’s at stake. That is why they are willing to bet GMail on products like Google Buzz.

    Facebook is the most serious threat to Google’s business that they have faced. If Facebook plays this perfectly, they will kill the bear and 5 to 10 years from now will be the largest and most profitable ad network on Earth.

    Anyone who plans to compete with them will have to do better than textual ad targeting.

  • Facebook.com overtakes Google.com as most visited USA domain.

    In a press release from HitWise published on CNN Money a few minutes ago, Facebook.com just overtook Google.com as the most visited domain in the USA. This is possibly the most significant milestone in Facebook’s history as a large company. Here’s why:

    Most of Google’s revenue comes from their Ad business. Half of it comes from their own properties and the other half from a distributed network of sites. (sounding familiar already I’m sure).

    There is a lot of noise around Google’s other apps and experiments, but from a business perspective that’s all it is. Noise. Google is a cash creation machine and the cash is created by the ad network both on and off-site. To give you some perspective, Gmail ranks a distant third among email providers with 37 million uniques vs Yahoo Mail’s 106 million uniques 5 months ago [Comsore].

    So Google’s business is relatively simple. It’s a the best search engine in the world and an ad network with themselves as their own biggest customer.

    Google built this business by first creating an incredibly hot property that gave it’s users an incentive to provide it with awesome targeting data. Then it built an ad network around the targeting data.

    The hardest part about building Google was to create the hot property (the search engine) that incentivises users to keep coming back and feeding it more targeting data. The next part of creating Google was a little easier because if they screwed it up the first time they get to try and try again until they succeed in building a money printing machine on the back of this hot-property-with-targeting-data that really does print money.

    Facebook have the hot property that keeps users coming back and feeding it targeting data. They really screwed up the Ad network the first time they had a crack at it with Beacon. But, predictably, their users forgave them and they’ll keep having another crack at it until their money printing machine is running at optimum efficiency.

    There are a few reasons I believe Facebook may be a bigger success than Google long term:

    1. They have better data in the form of individual demographics, interests and data inferred from the social graph.
    2. They already have a distributed network of sites in the form of Facebook Connect which has deeper integration than AdSense. That means Facebook gets more data about visitors to those sites than Google AdSense.

    Possible risks:

    1. Their management team doesn’t have Eric Schmidt. Eric spent years getting schooled by Microsoft when he ran Novell. So he has the hunger, the scar-tissue and battlefield awareness that you need to compete with juggernauts.
    2. The hasbeen factor. Facebook has had a surprisingly good run and has proven to me it has legs because I’m still going back after a few years. But lets see if they can maintain that over the next decade.

  • How much traffic do the biggest typo domains get?

    There’s an article on searchengineland today about domaining and how Google and Yahoo “make money off a twitter typo domain”. I’m not sure I’m as excited about exposing this travesty of justice as SEL is, but I was curious how much traffic typo domains get:

    Alexa domain typo traffic

    In my brief research I found facebok.com was by far the biggest winner with twiter.com running a distant second. But their traffic dropped off to a trickle middle of this year. I wonder if facebook themselves or a popular app mistyped a URL somewhere and then fixed it.

    Other variations of facebook, twitter, google and myspace didn’t yield much. I entered a high traffic site who’s exact numbers I have access to for comparison and by my estimates facebok.com was getting just under half a million uniques per month. Nothing compared to the real FB, but slapping remnant advertising on there would yield $1000 to $5000 per month. Twiter.com gets around a quarter million uniques per month netting around $500 to $2500 on remnant ads.