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Why Facebook could out-Google Google in the content ad network

February 27, 2012

I have long thought that Facebook is sitting on the top of a tremendous change in the way we think about advertising. Outside of Google (which we will get to later), Facebook knows more about its customers than any company in the history of the world.

Facebook knows more about me than my employer. Facebook knows my religion, my sex, my age, my education and my friends. It knows my interests, kids ages and my dog’s birthday (from a status update). It could easily figure out than I’m a fan of The Arsenal.

Facebook knows me.

My point is this: Facebook will no doubt get into search (you really should read and subscribe to Adverlab, Ilya is one of the best bloggers out there).

Google is the other company that knows more about me than anyone. Unlike Facebook, which knows my history, interests and social structure, Google knows my desires.

Image representing Google as depicted in Crunc...

Image via CrunchBase

Google has already proven they are excellent at advertising to my desires. The Google advertising network works because it advertises to what we search for, or what we are interested in. Sort of.

If this blog had Google ads on it, then you might see an Arsenal ad, a Google adwords ad, and perhaps an ad for dog food. As Ilya wrote while talking about the delivery of ads:

“Reason one is that, at any given moment, only a fraction of the exposed audience is actively on the market for the benefit that the advertised product delivers.”

If Facebook gets more into search, they could potentially solve this issue. But the money that Google makes is in the reach and impressions from the Google ad network.

I think Facebook will get into the ad network business. The off-Facebook advertising. Google calls this the content network, wherein marketers place their ads to content. They cost less than search advertising because they aren’t as relevant. Just because someone reads a blog post that mentions the greatness of The Arsenal, it doesn’t mean they want to buy the away kit.

So what can Facebook do different from Google? It could throw Arsenal kit ads in front of me regardless of where I read content. Again, Facebook knows me. And it knows you. And if you are logged in, it can track where you visit, and throw ads past you that reflect your browsing history and your collective interests. Additionally, those ads in the content network could be friend approved. And not because the friend ‘liked’ the ad, but because the friend likes the thing being advertised.

I think that is the money shot of solving the efficiency and effectiveness problem.

Unless people log out of Facebook.

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4 Comments leave one →
  1. February 28, 2012 8:46 am

    Great Post. Thanks for the heads up on Adverlab, added it to my reader.

    I agree with everything you posted at a macro level. Where I see the difference is in how they bring solutions to the marketplace. I see one company run like a physiology lab the other run like an engineering lab. The size has also something to do with it.

    Facebook has a large untapped potential, the question is can they put the pieces together, do it right, and not screw up in the process, because they tend to take a ‘all-in’ approach to releases. So every time Facebook tries to release something, they introduce a change the users have not been involved with, and thus there are no champions or hero stories about new capability,. Thus, they risk turning people away from their platform, or put another way they risk having users leave to another social networking site.

    Google on the other hand has learned to take small ideas, incubate them, then scale as success is identified and increased. They are not afraid to let users be in the incubation process, and also not afraid to pull the flailing product (regardless the user base) if results don’t live up to expectations.

    So in the end, it really won’t be who has a greater potential, it has more to do about how well each company executes in their business model. I currently place the advantage on Google.

    • February 29, 2012 9:05 am

      I think Google has a head start. But I think Facebook is sitting on more valuable data for advertisers. Google knows what you like, Facebook knows what your friend likes. In a world where ‘testimonials’ can be one to one and real, that is potential.

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