Two of the biggest web giants in history–popular social networking site Facebook and the veritable king of all search engines, Google–don’t often admit that they’re in competition with each other, even when directly asked about it. In fact, Google’s Vice President of Product Management, Nick Fox, said in February at the Goldman Sachs Technology and Internet Conference in San Francisco said that Google was confident in its display advertising methods, and that “It’s not ‘us’ versus ‘them.’”
But isn’t it?
After all, Facebook has over 700 million users–and continues to grow rapidly. In 2010, the company took in $1.86 billion in advertising dollars, accounting for 4.7% of total digital ad spend, and will take in an estimated $4 billion for 2011. And, while Facebook has a 23.1 percent share of display ads, Google Sites have just 2.7%.
As a fairly new social networking site, Facebook has a lot less competitors for its adspace than Google. Advertisers have only jumped on the Facebook bandwagon recently. Additionally, Facebook has better targeted advertisements and about 39 billion impressions each month, and is estimated to become a few times bigger than Google. It also has less strict rules about advertisements, and–here’s one of the most important factors–it’s “cost-per-click” is much less.
Still, Google remains the dominant contender, with $21 billion in revenue from last year (most of it from advertising.) Google is also a bit more diverse. It’s not only a search engine, of course, but a relentless advertising machine — and has its hands full with online video, a browser, e-mail, document management, (basically) its own phone (the Android) and much more. Google owns approximately 2/3 of the market share, as well.
Some might wonder why the comparison even matters — after all, Facebook’s purpose is almost entirely different, right? Users share pictures, videos, links, and chat; the experience is based on users’ interests/likes/dislikes, and they’re more or less bombarded with ads based on what they choose to put on their profiles or say to others in their networks. With Google search, users already have something in mind. Until Facebook search lives up to Google search, the competition won’t be as formidable.
But it looks like Facebook is already hip to this disadvantage. Facebook’s “social search” was approved in February of 2010, after seven years in the U.S. patent office — users will be able to access from their Facebook home pages. (They already have a search engine partnership with Bing, but it only shows links that users share on Facebook.) And, as seems to be the general trend with the web, search will probably become more social. Google is struggling to put together its own social networking platform, but Facebook already has 700 million users, which means it’s already in a better position to invent a search engine than Google trying to break into the social networking world. (Its social initiative, tentatively called “Google Me,” was slated to come out in 2010, but has now been pushed back to Spring 2011. And “Google Buzz” failed, both from a lack of concern about user privacy and, basically, a generally uninteresting interface problem.) Besides, Facebook also has various platforms like Facebook Questions and community pages to offset its lacking search functionality. And many sites also offer some kind of Facebook integration–usually with some kind of “like” button added to the page.
So, Facebook is a threat to Google, but not a huge one just yet. As both companies evolve, they’ll likely continue to take turns out-smarting each other in the social and search engine advertising worlds alike. Their philosophies are entirely different–after all, Google uses algorithms that determine the relevance of each web search, while Facebook basically allows users to create their own “search” map of the web–and it’ll be a while before we see which one becomes more dominant.