A recent article in Ad-Age speculates on a looming battle for advertising revenues between Google and Facebook – and places all bets on Facebook emerging from this battle in pretty good shape.
The battle lines seem to be drawn along the lines of a question that borders on the philosophical: “Where does relevance come from?” And apparently Google and Facebook are pursuing different methods of establishing relevant connections between advertisers and potential buyers.
Consider that, in Google’s world, relevance is being pursued with reference to a theory of “becoming” (or, if you prefer, “intention”). When a person types a particular phrase into Google’s search bar at a particular moment, Google assigns probability to the relevance of web pages based upon Google’s interpretation of the intent encoded in the particular constellation of words selected (as well as some reference to the geography of the searcher’s IP address.)
By contrast, in Facebook’s world, relevance is pursued with reference to a theory of “being.” The prediction of relevance is not based upon a specific action by the Facebook member, but rather by a pre-existing profile that includes a fairly robust set of ranges: location, age, sex, relationship, sexual orientation, likes and interests, groups, religion, political views, education level, city and, even, employer.
In some respects, this is much more in keeping with the old-school approach to media channel targeting, where cost per targeted impression (based on demographic/psychographic audience profiles) stands as a primary consideration. But, upon that paradigm, Facebook advertising overlays features that have undoubtedly been part of Google’s disruptive success to date: (a) a performance-based pricing model and (b) the possibility of direct behavioral observation of response via the click-stream. In addition, the compound filtering of profiles offered by Facebook allows you to whittle down from roughly 120,000,000 North Americans to a remarkably narrow target in seconds. Try doing that with a buy in magazines, radio or TV.
In the war for the attention of consumers, it’s not clear that a theory of “being” will win out over the theory of “becoming” – but in the war for the attention of advertisers and the agencies that advise them, Facebook has put together a savvy package. And the good news for advertisers is that you don’t really need to speculate on where your money is better spent. If you have a search marketing program already rolling, and some infrastructure for web analytics and marketing automation, it would require only a modest effort to ramp up a Facebook advertising program and compare it on an ROI basis, measuring conversions at various points through your lead funnel.
For that reason alone, Facebook ad revenue seems poised for a growth spurt. But, contrary to the perspective of the Ad Age article, my suspicion is that the growth of Facebook advertising revenues will only make a temporary dent in the growth of Google’s advertising revenues because, well, Google’s approach to relevance has worked pretty well so far, and Google does not seem to be running out of ideas to expand upon it. If, on the other hand, I were a publisher or broadcaster reliant on advertising revenues, I would be looking quickly for ways to strategically align myself with Facebook by becoming a part of their profile fabric and value chain, rather than trying to directly compete with Facebook for advertisers’ dollars. All present indications suggest that the game is going to get harder and harder to win.