Is Facebook A Global Threat To Google?
Does Facebook pose a threat today or in the future to Google by swallowing advertising dollars - and will the inclusion of web search speed that process? Google and Facebook actually many historical similarities - including the shape of their global roll outs.
In December, Hitwise released data showing that the top Google search term of 2009 was “Facebook” having moved up from position number ten in the previous year. Hitwise also wrote that Facebook took the number one spot on Christmas Day—a claim Barry Schwartz later investigated.
Facebook’s popularity surge reminded me of a conversation I had with a search engineer who had earlier worked at AltaVista when it was the number one search tool. He explained that he had decided to leave AltaVista when the writing on the wall became clear that newcomer Google was headed for preeminence. This search engine upstart had taken the number one search term spot at AltaVista, he said, for nine consecutive months. Time, he decided, to move on.
Battling over advertising dollars!
Of course, Facebook and Google are different animals and serve different purposes. But the audience is the same, the advertising dollars are coming from the same budget—and Microsoft owns more than 10% of Facebook, so Bing will likely soon be more visible for integrated web search. So Facebook could potentially rob Google of advertising dollars if it globally performed a better job of delivering performance advertising.
Google and Facebook actually have a lot in common. Both are California-based businesses funded by venture capital which have taken the online world by storm. Both started out without really knowing how they were going to make money initially giving services away “free” to build audience. And both sought to win the US market first before expanding and focusing on the rest of the world.
If it’s a great idea, move blisteringly fast
When Google moved to take on the world, it discovered not only had it been “emulated” in other markets giving local players the first mover advantage before it, but certain strategic oversights hampered its progress. Google didn’t acquire its own local domain names outside of the US until several years after it started, for instance. Both Google and Facebook have also used some form of crowdsourcing or volunteering to undertake localization for broader markets.
What this demonstrates is that if you have a great idea with global potential and you intend to go there,you’d better move early and fast because it’s very easy for local players to use your great idea and to become a threat to your own progress in your future roll out.
The same pockets of resistance
Both Google and Facebook have suffered most in similar markets—generally these are the furthest away linguistically from their start point. Google has not yet conquered Japan, Korea, China or Russia where Yahoo, Naver, Baidu and Yandex respectively all have number one spots, even after a decade of dominance by the big G elsewhere in the world.
Facebook claims 350 million users worldwide and is the global number one social networking site—but that fact hides a lot of important local detail. In Russia, Vkontakte and Odnoklassniki have 69% of the social networking market share combined—according to comScore, which also points out that Russia social networkers are particularly engaged. Meanwhile, Facebook trails with a skimpy 2% share of the social network space in Russia.
Fringes still for Facebook
Netratings data puts Mixi in Japan at a 15% share of the Japanese population whereas Facebook is nearer 2% despite a recent jump in users. In China, where Facebook has had Google-like censorship difficulties, Qzone has over 200 million users (ouch), 150 million of which update their accounts at least once a month. And those figures relate to a site where many services are not free!
Figures for the share of advertising budgets between Google and Facebook by country aren’t readily available—but it’s a reasonable assumption to make that Facebook is significantly further behind in non-US markets than it is in the US, so a quick answer to the question posed by the title of this post would be that right now Facebook isn’t troubling Google much at all. But what of the future?
“If you want me to buy, speak my language”
Facebook could take charge of the next decade if they make all the right moves, but so far some of these are missing:
- Deliver an effective and cost-effective advertising system
- Rapidly roll out the embryo web search feature
- Localize the site in a more friendly way for local users
On the localization front, Facebook has done the essentials. But it hasn’t gotten real close and cozy to its users. Even subtle things such as not using local domains (some of which it owns), with a double-termed language-country subdomain (Japanese-Japan is at ja-jp.facebook.com and German-Germany at de-de.facebook.com) just look like the database builder’s solution rather than what the users really needed. Some of the localization results have also been a little clumsy—though getting better now. But Facebook is truly the one-size-fits-all solution.
It’s true that you could make the same criticisms of Google—it’s only in recent years that they had engineers based in Russia to help deal with the complexities of the Russian language, for instance. But I would argue that social networking is much “softer” than search and that means that cultural issues become more critical success factors.
If Brazilians are at carnival do they really want to network socially? Yes they do, in droves—but on Google-owned Orkut rather than Facebook. That’s their choice—and if Facebook really wants to become the global number one everywhere it will have to go further in understanding local choices partly because it is a social network. Until then, Google is pretty safe—and thinking carefully about positioning itself more closely to local users.