Ever since Facebook introduced its groundbreaking Graph Search product this past Tuesday, the ad tech world has been buzzing about the revenue potential.
In case you missed the announcement, Graph Search is a bold new Facebook search engine that allows users to search for things their friends and other Facebook users have shared, such as likes, jobs, places lived, and relationship status. So, for example, if I found myself in Miami and wanted some good Cuban food, I could go to Facebook and search "Cuban restaurants in Miami that my friends like" to get recommendations, instead of Googling "Cuban food Miami." Pretty cool.
Facebook recently partnered with my company, Chango, to allow advertisers on the FBX ad exchange to target Facebook users based on the searches they perform on other sites. Graph Search is still in beta and contains no ads, but Zuckerberg acknowledged that ads are a possibility in the future, and analysts are confident that ads will be a big part of Graph Search's future. After all, search ads are arguably the most lucrative part of the digital ecosystem, since searches often communicate a user's intent to make a purchase. Integrating sponsored search results into Graph Search is a no-brainer for Facebook.
In reality, Facebook has already been earning money from search ads in its search results. When you search for something on Facebook, it gives you the option to also "search the web" via Bing, whose search results pop up within Facebook -- including sponsored results. Facebook receives a share of the revenue from those ads. Bing results will continue to be offered through Graph Search, and as searches increase, so should Facebook's revenue from sponsored Bing results.
Other revenue possibilities are more speculative. Last year Facebook tested a paid messaging feature that allows users to pay to get their message placed at the top of the main inbox of someone who's not their friend on Facebook. Graph Search will encourage people to search for certain types of people who they're not connected to; for instance, if a guy is looking for a girl to take out for Japanese, he might search for "Single women near me who like sushi" and then perhaps pay to send a message to the right girl. Or, if a job recruiter is looking to find an engineer, she could search for "friends of friends who work at Google." In order to ensure that she reaches this new person, the searcher would likely be compelled to send a paid message.
The possibilities are endless. Photos are also searchable in Graph Search, so a brand like Beats By Dre could pay for their branded photos to show up when a user searches for something like "pictures from music festivals." Dating and job recruiting apps would be a logical extension.
Or maybe Facebook will just go crazy and decorate the entire thing with GIFS of dancing cats. We'll have to see.
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Really only fair turnabout.
There's also the problem of the tech itself. You're going to have to keep waiting if you're hoping for a Google-killer (which much of the article implies). This is a radically different service, not the least of those differences being the data in question and how it is being searched. Google did *not* get to the top of the heap via ads, but by heavily investing (many speculators said dangerously so) in technology development early in the life of the company. Google got to where it is by having the most robust, flexible, and reliable heuristics human endeavor has yet produced. Every other success builds on that one.
Facebook doesn't exactly have a stellar track record with hard tech.