test.ical.ly | getting the web by the balls

Jan/12

3

Why I think Facebook will attack on Google AdSense

I made some predictions about what’s going to happen in 2012. One of them was that Facebook is going to attack Google AdSense by pushing their social ads to the web. Websites are going to run social ads like they run AdSense display ads right now.

Now why do I think this?

My prediction starts out with an observation I made earlier last year about Google earning its money all over the net while Facebook only benefits from facebook.com. In a nutshell Google AdSense is running on a vast number of websites earning money for Google as well as the website owners. Facebook on the other hand earns money with their social ads / sponsored stories which are running on facebook.com only.

Facebook so far tries its best to drive traffic to its own website to an extend that it could almost be taken synonymously for the web. As you can see in this infographic taken from Sascha Lobos blog.

As you can see the traffic volume on facebook.com is incredible (internet porn is ignored in this infographic). But can it grow any further?

More importantly most information that users seek on the internet are outside of Facebook but on many smaller websites and Facebook does not benefit from them.

Then in december last year I attended the AllFacebook Developer Conference and saw the keynote by Simon Cross – one of the Facebook Engineers working in the UK – and his presentation on the new Open Graph.

The most interesting part was that you can now use meta tags to specify the contents of your pages and build relations to other pages. Basically it allows you to make the taxonomy of your website known to Facebook.

You can use this to customize the timeline messages a user gets when he uses your website. In Simons example this could be a recipe you read on a website and in the resulting status message would be links to landing pages for the chef who created that recipe and to the ingredients. Why? Here is what Simon said:

“[..] to drive traffic to your website.”

This is a paradigm shift!

Why would Facebook want to drive traffic away from facebook.com? This only makes sense if there are plans to monetize on other websites as well and their new social ads / sponsored stories are just the thing they need to do that.

Social ads offer a benefit compared to Google AdSense. Instead of Googles context relevance Facebook can offer social relevance with their ads which promises a higher CTR and therefor more revenue.

A move like that would also make Facebook much less dependent on facebook.com. It would broaden its business model by and large.

There are two obstacles though.

First there are already Facebook users forming against the use of their profiles for sponsored stories. Users are increasingly aware of how Facebook uses their profile informations and many don’t like it. I think this will be an ongoing process which will lead to a compromise of some sorts but it will take some time and probably has to be clarified before launching sponsored stories outside of facebook.com.

Second there are those disruptions typical to Facebook. Every now and then usually on a weekly basis something on Facebook breaks due to updates. Users can not use a Facebook feature, apps stop working, insight data gets lost, like button loading times increase drastically. This is annoying and already makes some app providers loose money. But nobody really complains as there are no contracts.

If you can place social ads on your website there will be contracts and service level agreements of some sorts. Just imagine websites who use these social ads to make money and the ads breaks for a day or two. This would be a significant loss of money to potentially many websites. Guess how this would pay out for Facebooks reputation.

In other words Facebook needs to get more professional when it comes to updates. Breaking its own website is one thing but breaking others is going to be a no go especially when this also breaks a revenue stream.

What are your thoughts on this?

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