DEAD WRONG about why Facebook terrifies Google
Joyce Park stashed this in Tech biz
One of the biggest open secrets of Silicon Valley is that very few people here know the slightest thing about the advertising business at scale. They constantly believe that TARGETING, ever finer and finer targeting, is where money is to be made in advertising. Hence, they believe that Google is "terrified" of Facebook due to the personal information that allows Facebook to target you as a space nerd cum Apple fanboy.
If you took one single day of meetings on Madison Avenue, you would grasp that the reason Google is terrified of Facebook is the EXACT OPPOSITE of targeting. It is the very stuff that targeting is supposed to supercede: age, gender, location -- in other words, dirt-simple 1950's-era demographic bucketing of very large numbers of otherwise undifferentiated eyeballs. Facebook has that data; Google doesn't.
If you are Nike, and your entire business strategy is built on the need to spend let's say a billion dollars a year on web advertising in the United States... do you need to target your ads? Not at all. Your audience is everyone! If you spend extra time to market to just fitness buffs, you're an idiot and will likely lose your job. Marketing is about creating demand in the masses; and there are demonstrably a shit-ton of people who eat ice cream on the couch while convincing themselves that $200 running shoes will help them get fit. All you need at scale is a source of very large numbers of sedentary couch-potatoes who want to learn all about your magical shoes.
I once took an eye-opening meeting with an ad-buyer who had worked on the marketing campaign for a very small independent movie with a niche audience. Even for this tiny movie, she had to scrape the bottom of the internet's barrels to find enough pageviews for the demographic she was looking for. Remember, each of these pageviews had to be tracked, verified, demographically validated, and basically represented by one of the relatively few ad networks she could have a check cut for. She was proud of herself for how hard she'd worked to market this film, but her struggle even at this scale was not targeting -- it was finding enough demographically decent pageviews.
So to review: Facebook has the pageviews and the demographic data. Google has neither except for YouTube. Google used to control ACCESS to the pageviews through searches, and they could place text ads against those searches... but with Facebook closing in on almost half of all US pageviews, none of which can be found through Google search, that advantage is rapidly dwindling.
I just re-read Dan Frommer's article and your counterpoint.
All along I keep thinking, It's the Interest Graph, stupid.
You make three excellent points:
1. Google+ is focused on age, gender, and location instead of the Interest Graph. They're skating to where the puck used to be. Interest Graph is where the puck will be.
2. Facebook, instead, is paying attention to Twitter's efforts to monetize the Interest Graph. They know that's where the big money is to be made.
3. Is the Interest Graph social? Not really. Google ought to know this -- it's how they monetize search by matching intent to buy with interested advertisers at the time a consumer searches.
In summary, as @troutgirl says, "I believe in the Interest Graph. But not for selling shoes. :)"
I should clarify that I believe Google is scared of the exact wrong things. Instead of worrying about Facebook, they need to think about Twitter and generally the decline of the open web. However, my main response to this article stands: whatever it is that Google is afraid of, it's not Facebook's ability to target ads better than they can.
I'd like to think that Google is adding age, gender, and location to remove those things as a competitive advantage.
That evens the playing field for advertisers who want the checkbox, so that they can then start to do better targeting according to interests.
This will take a long time to play out. Google can afford to build patiently.
Facebook is bringing us the successor to the Internet: the Likernet:
Instead of the Internet’s web of links, the Likernet offers a social graph of likes.
In the Likernet, things only come to you from friends. I like friends. Who doesn’t? In the Likernet, you don’t need filters and antivirus software — a stern look or sarcastic remark is enough to let your friend know when they should cut out the monkey business.
Facebook’s Likernet is a bright, safe, sanitary metropolis. It’s like Singapore, but in cyberspace with 100 times more citizens. Most current Internet residents will prefer to move to the Likernet. And even if you don’t want to move, you may find the Likernet rising all around you, leaving older Internet districts as blighted slums.