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Facebook’s $100 Billion Cookie Jar? Social Media and Performance Marketing Convergence
VentureBeat speculates on whether or not Facebook could see astronomical growth in its valuation after it deploys its SocialAds advertising platform next month.
When Facebook launches its “SocialAds” advertising product on November
6th, the technology will reportedly rely on cookies — unique
identifiers sent to each user’s computer from Facebook, and returned to
Facebook when they visit web pages — to identify users and serve them
contextually relevant ads on sites across the web…Advertisers would be able to clearly see interests in beer and other
such personal information for 50 million Facebook users, for the first
time. Right now, the ad networks record actions like surfing or
clicking, but lack specific data about what you’re actually trying to
accomplish through your actions. There aren’t many places besides a
Facebook profile where the average young man will write “I like to
drink beer” next to their name.
While I don’t expect we’ll see Facebook rapidly grow to that large of a valuation in the short term, this is an interesting frontier of online advertising to watch as social media begins to converge with performance marketing.
Cookies are no where near perfect as a foundation for metrics (as seen in the latest dust-up over cookie stuffing on ABestWeb, etc). However, the online marketing and advertising industries have continued to improve upon their reporting efficiency as we work towards better metrics. Combine that more efficient cookie with Facebook’s wealth of information about a user (likes/dislikes/political views/etc) and you start to see a much more targeted adscape.
But here’s where it gets interesting in my opinion. Facebook won’t be the long term winner as these social networks converge with performance marketing… Google will be.
Let me explain my point of view. Jeff Molander recently quoted me from an email conversation in his post about Google missing the social media train. Jeff makes the point that “Google doesn’t get social media” and will thereby fall behind the likes of Microsoft / Facebook in the coming years as social media grows to over $10 billion in channel revenues by 2012 (according to Forrester). My point in his piece is that we haven’t seen Google’s social media play yet. (Interestingly enough, it will be announced the same week as Facebook’s SocialAds announcement in November):
Sam Harrelson suggests we’re about to see something huge from Google.
“Google will win the social game by being more open than
anyone. The social network of the coming years will not be a walled
garden or specific app like StumbleUpon. Instead, it will be the
leveraging of all of our content and data with open API so that we (or
others we trust) can use those to build very niche and very
user-centric applications that push-pull data all over the place.”He continues,
“Facebook isn’t compelling
because all of your friends are there. It’s compelling because it
aggregates all of their data and yours. Google sees that and is going
to out aggregate Facebook while opening it up to the outside (something Facebook can’t do). And that is a potentially killer strategy. Facebook
has a platform to allow third parties to build applications on Facebook
itself. But what Google may be planning is significantly more open–allowing third parties to both push and pull data, into and out of Google and non-Google applications.”If Mr. Harrelson is right (and he usually is) Google passed up Facebook with good reason and we all need to cool jets.
I don’t know if I’m right, but I do know that Google is planning on something very interesting for the convergence of social media and performance marketing.
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as an advertiser, do i really need facebook’s socialads to tell me that young people like beer?
good for facebook for building an enormous audience, and for building a contextual ad platform to monetize it. in that respect, they are way ahead of other social networks, but just playing catch-up to google.
as for google becoming a big player in the social scene? i don’t see it.
MCRobert-
Looks like Google is going to become a very big player in the social scene very soon.
I think if you look at Jaiku’s format you get a vague idea of how it be a “meta play”. Google doesn’t create content…the enable its creation.
They don’t put up fences,the give people fence cutters.
Sam,
SO what we should see is Google having an advantage by not pile driving into the social networking game. I disagree Jeff. Google gets social networks, they get enough to know it is hands off. They don’t control them, they provide petri dishes for the culture.
All of the below are wild assumptions of course…
Google probably liked twitter, but Twitter passed and it comes down to Pownce and Jaiku as the legs of the micro-chunked triad. Jaiku gets snapped by G. What will reveal part of their strategy is what they “take away” from Jaiku
Yes I see performance marketing convergence, if you recall my old post about baseball farm club teams and “graduation” a year or so ago. MSFT should have torn into Javascript then and cut Achilles heel and used their war chest to ride it out.
Tremendous amounts of very cheap inventory (much of it produced by amateurs with no regard for monetary gain), where material is now recycled faster and faster…we see this now as a Pownce, Tweet or Jaiku status can slither seamlessly into each other’s services. RSS extends and it resembles (new buzzword) Content Taffy. I stand by that micro-chunked information can’t give you the depth of a blog, but they are more like “connective tissue” or “capillaries” of the blood flow.
If I were Google I’d have looked at FB and tried to buy it and dismantle it, but they take a pass on Facebook and MSFT probably took a bite just to be in the know of something they don’t know (contrary to Jeff). FB doesn’t align with their strategy of empowerment through APIs engineered to destroy walled gardens.
Google does not create content thus their play will be structural. Content creation does not scale. They provide platforms, often best through acquisition, and make them durable with dark fiber and robust servers that can handle the load. We see Twitter struggling with that now.
Searching inside of social networks is still compelling, although one might argue intent will be different and thus queries will be.
What do you do with all of this inventory? Arbitrage it out via revenue share…
Google gets its piece and it will back out to a fair eCPC or eCPM if you factor in the soft gains of powering the social backbones. Once again it all to easy to just let Google do stuff for you.
Lot more, but at 20k feet…that is a micro take. Cut and paste, cut and paste…
“What they haven’t done is launch yet another social network platform”…says Tech Crunch…why? It would be redundant.
Content Taffy- there is an overabundance of social networks now- people complain of fatigue. It just lacks homogeneous features.
You can bet they will cherry pick partners OUT of Facebook…
-wayne
Sam, i realize what google is *trying* to do (i read tech crunch too), but they’ve *tried* to do a lot of things, outside of their core, and struck out at most of them. of course with their resources, they’re always capable of hitting a homerun. just saying that so far they’ve struck out a lot…
and while google’s opensocial would be hugely beneficial for developers, how does google benefit, specifically? do they plug adsense into developers widgets that build on opensocial? that would be a clever way into facebook by google. but facebook couldn’t afford to let that happen, having just built their own version of adsense. maybe facebook would offer higher payouts to developers in order to keep them building on the facebook platform?
i don’t know, more questions than answers…will be interesting to see how this all plays out.