Fortune had a very interesting post on the battle between Google and Facebook for the online advertising market.
Google is primarily in the search ads business, and they are extremely successful at it. Search ads account for some 40% of online advertising, but they work. They drive revenue — Google’s search ads deliver click-through rates just over 5%, according to Nielsen Online, compared with rates of 0.2% for online ads in general.
Google has not been as successful when it comes to social networking. It has its own site, called Orkut, which is big in Brazil and India but hasn’t caught on here. Google recently unveiled a competing alliance of social networks, an unwalled garden in which everybody but Facebook was invited to play. Google pulled together all the other big social networks — including MySpace, LinkedIn, Ning, and its own Orkut — representing a population of 200 million, four times the size of Facebook. It named the consortium OpenSocial.
Facebook has counted with Facebook Ads. Now, whenever Facebook users rent movies at Blockbuster.com say, they are asked whether that information can be shared with their friends. If they click yes, their friends’ news feeds will receive that information, sometimes with a word from the sponsor. (The sponsor pays Facebook for the privilege of placing those ads and for access to Facebook user data; sponsors also get a free home page like any other Facebook member.)
Facebook founder Mark Zuckerberg put Facebook Ads this way:
“Nothing influences a person more,” he said, “than a recommendation from a trusted friend.”
So who will win the ad battle for the social networks? At the moment Facebook is winning simply because they have a product and delivery system that is live. While Google is still formulating its plans for social ads, 100,000 advertiser pages went up on Facebook the night after Zuckerberg unveiled Facebook Ads.
It has been pretty impressive to see how advertisers have flocked to Facebook Ads. 100,000 advertiser pages shows how much that advertisers have embraced Facebook’s plan. Sean Finnegan, CEO of Omnicom Media Group Digital, called it “a groundbreaking step toward associating word of mouth — the best medium ever — into the advertising space.”
It is still too early to see who wins this battle. Facebook has taken an early lead and it will be interesting to see how Google responds. Other than search ads, Google has had very few successes. Will social ads be another Google failure?
I disagree, I think Adsense has been a huge success.
dave, would you take a look at the last sentance, I was not sure it made sense.
Hi Glenn
I think of Adsense and Adwords as being related products, but I can see how you think of them as separate. Adsense has been a huge success. It changed how people wrote and displayed content on their web site.