Facebook Vs Google: No Contest


So the conversation in tech media of late is that Facebook is set to become a bigger cash cow than Google.

Why?

People spend more time on Facebook. Facebook has users locked-in (kinda). Facebook “owns” the social map. Facebook is popular. Facebook is everywhere. Facebook is big.

Uh-huh.

Facebook may be all those things, but when it comes to translating “viewers” into revenue, Google currently wins hands down.

Google wins because Google’s advertising is closely aligned with the users primary activity, which is to seek topics and click links. The primary activity of a user on Facebook is to socialize. Translating this activity to a commercial imperative, in a way advertisers find profitable, is the challenge Facebook faces.

The primary user activity on Facebook isn’t yet as conducive to effective advertising as the topic-matching system used by Google. This shows up in the revenue data.

Google’s revenue, with supposedly fewer users than Facebook, is $23.531 billion – and rising. Facebook, with more users, who reportedly spend more time on the site, has estimated revenues around $1b. Admittedly a bit of an apples-and-oranges comparison, but useful to get the two entities in perspective. Facebook is nowhere near Google in terms of advertiser revenue.

In short, being popular doesn’t necessarily translate into revenue, or marketing value. Ask any popular blogger who is blogging on a non-commercial topic. It can be difficult to convert some audiences, and some activities, into revenue and advertiser value.

As a commenter, Chris Norstrom, on the TechCrunch page I linked to above pointed out:

500 Millions users does not mean those users want to accomplish EVERYTHING on your site. Facebook already tried their own version of “yahoo.Answers” and it failed. People come to facebook to lol with friends and waste time, nothing more. Not to check inboxes, not to ask questions, not to participate in groups, not to rate stores or check into places, not to send or receive money, not to edit documents.

Is he right, do you think?

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This post was written by David Moceri