POV: Facebook Goes Into the Search Business
MINDSHARE POINT OF VIEW – Just a few short months ago Facebook couldn’t do anything right. Universally derided for its IPO debacle, every pundit in town took their turn lambasting the former darling of the media industry. What a difference a few months make. Not only has Facebook’s stock nearly climbed back up to its original IPO evaluation (around $30 as of writing), the company has also kicked off 2013 with a bang by announcing a major new feature, Graph Search.
Graph Search enables users to get information through their network of friends, or their “social graph”, and importantly includes brand pages, thus encouraging marketers to invest in stronger fan hubs within Facebook as well as on the Web. Graph Search will enable users to ask basic questions such as “What’s the most liked Mexican restaurant in London” and get answers based on the Facebook ecosystem - friend’s data, applications, brand pages, etc. The initial beta will be limited to US English Facebook users. In addition to Facebook content, Web search results will also be included, all powered by Bing, and including Bing advertising. Further roll-out by user, language, and market will happen after the initial test.
A Facebook search product has been one of the industry’s long-standing rumours, and is clearly a direct challenge to Google, which is busy layering G+ social intelligence into its search algorithm, which remains its prime business and core strength. Facebook’s approach relies on incentivizing its 1 billion + users to tap into more of the social network’s features by simply making it convenient to stay within its ecosystem to perform the Internet’s most basic functions. However it will take some persuading to get consumers and advertisers to migrate such ingrained online behavior into Graph Search given Google’s dominance in search, in some cases over 90% of a market (e.g., the UK). Bing has tried for years, even going so far as to weave in Facebook data, but has struggled to significantly change market share. Sticking Bing into Facebook is a logical move but may not be enough to fundamentally alter a consumer’s knee-jerk reaction to ‘Google’. ‘Graph Searching’ doesn’t exactly roll-off the tongue.
In addition to taking on Google, Facebook may simply be looking for ways to bolster usage on its platform. Recent data and research from SocialBakers indicates that Facebook’s users are dropping out or simply less engaged, all of which would mean less inventory and less people to target with advertising. Facebook deny this and other assertions, including the long-dreaded youth exodus to places like Tumblr. Functionality such as a Graph Search will potentially give such people a compelling reason to stay and engage.
After a difficult 2012, Facebook now has some clear momentum going into 2013. Its share price has rebounded in the market as investors have regained confidence in its ability to monetize the platform, particularly in the mobile space. Graph Search open up a new revenue stream while providing existing users another reason to stick with the platform, growing ad inventory in the process. This may be the first of several new Facebook features and enhancements lined up over the next few months. No doubt Google is just around the corner with its response.