Tag Archives: Search

Why OpenGraph helps Facebook become a $100 billion company

I had the good fortune of being able to attend Facebook’s F8 conference today. While I’ve been quite the Facebook (as a business) fanboy for some time, after today I’m absolutely convinced that with OpenGraph, Facebook has finally exposed the true power of its platform in a way that will help it create incredible value in the coming years. Today’s discussion at F8 didn’t directly touch upon the value of OpenGraph to Facebook, but I believe that the value of the data that Facebook will collect and organize via OpenGraph will allow it to build search and advertising businesses potentially more powerful and sizable than those of Google.

I’ve written before about the importance of data in advertising and the trend towards buying audience rather than impressions. Facebook’s OpenGraph will create the richest user profiles yet, enabling advertisers to target specific audiences based on their friends, Likes, and activity, anywhere that audience can be found on the web. This kind of data and targeting differs from Google’s search-based intent data in that it helps advertisers reach their target consumers earlier in the purchase funnel, enabling what Facebook has called demand generation. This data, combined with the potential of earned media via Facebook and its social plugins, could be the key to shifting billions of dollars in brand advertising spend to the web.

Potentially more important is what I consider to be an entirely new category of search, which I refer to as “subjective search”, that may finally be realized because of OpenGraph data. While Google will likely continue to dominate search for queries where there are objective results, my view is that Facebook will become the default search provider for queries that are subjective in nature. After all, with a graph of my preferences, those of my friends and those of the broader web population, won’t Facebook be in the best position to tell me what Italian restaurant to eat at in Palo Alto, what action movie to see on Friday night or where to go on vacation with my family?

I’m not sure that anyone could have honestly envisioned that we would see another Google-type business in our lifetimes. But by wielding the power of OpenGraph, Facebook could build yet another incredible business based on search and ads. My frequent comment that Facebook will be worth $100 billion sometime this decade has regularly been met with laughter and ridicule. I wonder if that statement will still get the same response after today.

Will there be a Google of video search?

Over the past few months I’ve spent time with a large number of companies attempting to solve the video search problem.  I think there is plenty of evidence to suggest that the consumer video search and discovery experience could be improved.  However, one issue that has been gnawing at me is whether video search can be a sustainable business.  If video search as a business depends on advertising as its business model, I have my doubts.  I don’t believe that advertising can be nearly as effective a monetization vehicle for video search as it is for traditional search.  From my perspective, there are many issues to be overcome, but some key issues are as follows:

1) Video searches are largely not commercial in nature. When searching for video, most consumers are looking for free entertainment content to be viewed at that moment. Based on the data that I have seen from various video search companies, my guess is that far less than 5% of queries have any commercial intent. As an example, below are the top 10 searches from June 2007 (representing about 28% of all queries) for one of the largest video search companies.

  • paris hilton
  • SEX
  • u2
  • angelina jolie
  • Akon
  • mya
  • sexy
  • ciara
  • t-pain
  • beyonce

Compare this data to traditional search, where Google delivers ads for the 40% of queries that it thinks are commercial in nature.  The volume of video searches that have commercial intent and could be monetized is likely to be limited. 2) Advertisers are afraid of user-generated content.  UGC is still the most highly consumed and available online video content.  Video search results are bound to contain UGC and few advertisers are willing to risk being associated with inappropriate content (e.g., violence, pornography, defamation).  Without appropriate filters and safeguards in place, big budgets are not going to be allocated to video search.

3) There is no standard solution to monetizing online video. CPC text and CPM banner advertising, which have been used successfully to monetize traditional search and webpages, respectively, do not effectively monetize online video. When a consumer is seeking video content, it is easy for her to ignore non-video ads as they are not the media type that she is seeking.  While numerous startups are tackling this problem by developing new ad units (e.g., overlays, bugs, post-roll) and targeting technologies (e.g., speech-to-text, audio analysis, computer vision), advertisers are not going to allocate large budgets until effective, standard advertising units are available in significant volumes. 

I look forward to seeing how the video search monetization problem gets solved.  Given the trends around online video consumption, someone is going to crack the advertising nut or figure out how to use search as the hook for another form of monetization.