First let me start off by saying that this article is pure speculation on my part. I have no confirmation from Google regarding this direction for the future of its advertising platform. However, I do think that there are some strong signs that indicate the potential future and possibilities for Google ads.
Last week I spoke at SMX Social on the topic of Google+ and the +1 button, which began leading me down this path of how Google plans to use its new social network and associated social tools. How important is Google+ to the company? Steven Levey reported in a Wired article about Google+ that Larry Page “reportedly mandated that 25 percent of the annual bonus check for all Google employees would be dependent on how well the company does in its social efforts.” Clearly, Google+ is a high priority.
But why? Does Google think that it can beat Facebook as a social network this late in the game? Perhaps. But I always preach that to find the real answer, you just have to follow the money. In a fantastic infographic (also by Wired) from earlier this year, it’s reported that 97% of Google’s revenue comes from advertising. If you’re shocked by that, you shouldn’t be. Google AdWords is the engine that drives the Google profit machine, and as a publicly traded company, Google has to always be considering how it can continue to positively affect revenue.
While Bingahoo has certainly stopped Google from owning 100% of the search engine advertising market, even the joining of forces hasn’t helped Bing or Yahoo gain much traction in search volume, leaving advertisers to continue to rely on Google AdWords as their primary source for search advertising inventory. Bingahoo doesn’t appear to be a major threat to Google’s cash cow, AdWords.
What is? Facebook. While Google may have captured search engine traffic, we’ve all seen the statistics about how much more time people spend on Facebook than on Google. It seems obvious when you think about the time a user needs to spend on a social network, where the goal is to be social with others, versus a search engine, where the goal is find an answer and move on.
But that’s a problem for Google, because while Google has dominated search engine-based advertising, it has lagged behind in the display advertising category, where Facebook recently won the top spot, serving up 33% of all online ads. Facebook advertising is also expected to attain 7% of all online advertising this year, compared with Google at about 41%. In Facebook’s case, it will have grown 52% in market share in just one year.
What does Facebook have that Google doesn’t? Demographics is the clear answer. As a search advertiser, I’ve long been frustrated by Google’s lack of demographic targeting, even on the search engine ads themselves. Facebook provides a myriad of demographic and other targeting options that simply are lacking today in Google AdWords.
But that all may be set to change. As I mentioned in my talk at SMX Social last week, Google+ is yet another conduit to open an advertising door for Google. Think about all of the things that Google already knows about you:
Want to see what Google knows about YOU? Just click on the links in the two bullets above while logged into your Google account. It’s pretty amazing.
So what on earth could Google DO with this data? I formerly worked in the online survey industry, and what you’ll typically find is that it is better to record information you already know about a person than to ask them to answer a question, if you can. In other words, while I have to TELL Facebook who I am, Google already KNOWS based on my search history and my friends.
Take for example a 60-year-old male with erectile dysfunction. Is he likely to share on Facebook that he has this ailment? Probably not. But will he use a search engine to find information such as “erectile dysfunction treatments,” “erectile dysfunction doctors,” etc.? You bet.
So the long and the short of it is that Google, through Google+ and learning social connections, can couple its knowledge with your search history to really know who you are at any given time, whether you reach out to Google to offer that information publicly or not. In my estimation, that is a MUCH more powerful form of advertising than what Facebook can offer me as an advertiser.