Why Facebook Wants to Be Google: Page 2

Facebook's IPO revealed that the company doesn't know how to monetize users.
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I checked the ads on Facebook for this column, and it's clear that Facebook doesn't know anything about me.

It’s serving me an ad for a mortgage company (I'm not buying a house), Dell computers (I’m a Mac user), a war strategy game (I don’t play online games), yearbooks for people who graduated from high school in the 70s (I’m not quite that old), wooden headphone covers (I don’t know why anyone would want this), financial services tips (I have no interest) and an ad that asks: “Are you a CEO?” (I'm a writer). Seven ads, and not one of them is even remotely relevant.

Social graphs on Google+, on the other hand, are almost entirely about shared interest. Looking at who I’ve circled - - even looking at the names I've chosen for those circles -- Google could easily tell that I’m a tech freak, a photo nut, a foodie, a traveler and all kinds of other things that would enable them to monetize the heck out of me.

And even when my family and friends eventually migrate to Google+, the site's "Circles" lets Google discard groups like "Family" and "Friends" to divine my interests.

So that’s Facebook’s catch-22. The very quality that makes them appealing to users is the same quality that muddles the social graph waters for monetization.

That’s why Facebook pushes frictionless sharing. If people auto-share what they read and listen to, maybe Facebook can figure out what they want.

Unfortunately, users are rejecting this. So there it is. Facebook has not successfully demonstrated an ability to monetize at a scale that would justify its valuation or anything near it.

And that’s why Facebook wants to be more like Google.

How Facebook Is Trying to Be Google

Google has a winning business model. Facebook does not.

Google uses Google+ to generate user engagement and “signals” it can use to monetize users -- not necessarily on Google+ itself -- but on Search, Gmail, YouTube and on other sites where Google currently sells ads.

Google can right-size advertising based on the various tolerances of people on different sites. So they might only be able to get away with small banner ads on Gmail, they can run 15 second videos on YouTube. They might even keep ads off the social network indefinitely. Unlike Facebook, Google is in no hurry to monetize the social network itself.

Also: Google gets mobile. While Facebook's mobile revenue is essentially non-existent, Google is on track to make about $6 billion on mobile advertising this year, doubling what they made last year.

Users are rapidly moving from desktop to mobile devices. Google is already raking in the dough in mobile, and Facebook's got nothing.

And that’s why Facebook is in a hurry to become Google.

Facebook is taking billions in IPO money and going on a buying spree to quickly grab Google-like capabilities. For example, Facebook is rumored to be buying Face.com, which might give it Google-like photo auto-tagging. Facebook is reportedly in talks to buy Opera Software. The company makes speedy mobile web browsers. There's also serious chatter about Facebook launching a Facebook phone.

The company has already attempted to buy Instagram, an acquisition now being looked at by the FTC.

Facebook is trying to buy itself a mobile business model that looks a lot more like Google's.

They're also doing something odd: They're breaking up their service into multiple apps. Facebook offers a Facebook app. They've also got a Messenger app. And this month they launched a photo- sharing app called Facebook Camera.

I think we can expect more desperate acquisitions. Facebook is no doubt trying to increase its "shelf space" on local browsers, as well as opportunities for monetization of mobile.

If the Facebook IPO did anything, it was to shatter the illusion that Facebook can easily monetize users. In fact, it demonstrated the opposite. So now the strategy appears to be: Copy Google and hope for the best.


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Tags: Facebook, Google, IPO, Google +


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