During this afternoon’s Microsoft-Facebook conference call, the question was asked whether the new deal would include paid search. Microsoft’s Kevin Johnson and Facebook’s Owen Van Natta declined to directly answer the question and made general statements about future collaboration and that the deal a “win win win.” Nobody listening was really all that clear on what it might mean as a practical matter beyond traditional display ads and hypothetical Facebook-specific ad types soon to be announced.
However, if one steps back it seems that one thing is fairly certain: A Live Search box and related ad inventory is almost sure to make its appearance on Facebook in the near term.
Right now the search on Facebook is site search (in several flavors). But there’s no Web search.
By contrast, MySpace, Facebook’s chief rival, offers Web search from Google with paid search listings:
Bebo has Web search too, powered by Yahoo:
It makes logical sense for Facebook to add Web search to its site, simply to make it more useful to end users, which is clearly one of Facebook’s objectives.
Today if I’m using Facebook and I want to conduct a search, I have to go off the site. The imperative to add Web search exists, irrespective of who the partner is. But since the partner is Microsoft, that search will undoubtedly be powered by Live Search. I’m sure there’s a contractual provision that would now preclude Facebook from working with any other provider.
And, it stands to reason, if a Live Search box is added to Facebook, the paid listings from adCenter will come right along with those search results. Exposing the huge Facebook audience to Live Search and monetizing that traffic with paid results is, I’m guessing, a powerful motivator behind this investment.
If I’m correct and Live Search is implemented, it has implications beyond Facebook. If this audience uses the Live Search box and becomes comfortable and familiar with it, then some number of Facebook users might begin to use Live Search more generally on the broader Internet. If that happens, the $240 million invested doesn’t look like such a costly figure — especially if it’s offset with display ad and paid search revenue.