Facebook Inc (NASDAQ:FB) has been a public company for just over six months, but the manager in charge of Google Inc (NASDAQ:GOOG) says the firm’s advertising methods belong in the past. Citing the design of the new sponsored search ads on Facebook, Bradley Horowitz suggested that his Google+ was further ahead on advertising technology.
“Jamming ads and agendas into user streams is pissing off users and frustrating brands too,” according to Horowitz. Google+, on the other hand, offers users recommendations from their friends when they perform a search using the company’s engine. Google Inc (NASDAQ:GOOG) is trying to avoid a significant flow of advertiser money from their platform to Facebook’s.
At this year's SALT New York conference, Jean Hynes, the CEO of Wellington Management, took to the stage to discuss the role of active management in today's investment environment. Hynes succeeded Brendan Swords as the CEO of Wellington at the end of June after nearly 30 years at the firm. Wellington is one of the Read More
The user numbers, a key metric for advertisers, do not add up in favor of Google Inc (NASDAQ:GOOG) claims. Google+ boasts user numbers of more than one hundred million. That number is clearly dwarfed by Facebook Inc (NASDAQ:FB) claims of over one billion users.
The problem of fake accounts persists, but it is likely that the problem is equally disruptive across both social networks. Users certainly seem to prefer the product provided by Facebook Inc (NASDAQ:FB), but they are just half of the battle. Advertisers need to be drawn in by engagement as well as magnitude.
Engagement, which leads directly to monetization by increasing the average revenue per user, is a key battlefield for Facebook. It is one that Horowitz,Vice President of product for Google +, is preemptively claiming victory on with today’s comments.
Google Inc (NASDAQ:GOOG) clearly believes that its strategy of using its social network to collect information about its users likes and wants, then telling their friends in a web search, is the advertising of the future. Facebook Inc (NASDAQ:FB) does not have the comfort of a widely used search application, and therefore must implant advertisements in user’s news feeds.
The problem with the Google Inc (NASDAQ:GOOG) argument, it seems, is that it ignores where the future of the tech industry seems to be headed. That future is away from web based searches, and into applications that specifically proscribed user’s usage.
The Internet is getting smaller, and the web itself is becoming a thing of the past. Users are tending to use the applications for popular websites, like Facebook, rather than looking at them on the web. Search is becoming less a primary need for users, and more a secondary back up.
Apps are available for almost everything a user might wish for right on their mobile device. Many users may not open a web browser even once per day, they will open a news app, a weather app, their Facebook app, and so on, without even realizing that they have left the web in favor of a new type of Internet space.
Where does Google+ fit into this new Internet reality? If its major claim to usefulness is its placement of advertisements in search results rather than more explicitly in user’s feeds, they can expect their revenue to continue to suffer. Google’s search is still the most useful tool on the web, but it is not nearly as indispensable as it was five years ago.
In the wake of recent disappointing Google Inc (NASDAQ:GOOG) earnings, some analysts said that the company could disappear into relative obscurity in the next decade. If the firm insists on relying on search as its primary sales point, that may well be true.
The way people use the web is changing, and it may be true that the entire structure of the market is changing, leaving a smaller share of revenue to all who enable advertisers. That would include both Facebook Inc (NASDAQ:FB) and Google Inc (NASDAQ:GOOG).
Perhaps, the entire industry they operate in is leveling off and becoming outdated. Though unlikely, it would not be the first major shift in revenue shares seen in the tech industry in the last decade. Simply look at the charge of Apple Inc. (NASDAQ:AAPL) through the profits of industries related to its business for proof of that.
The future is uncertain, but it will not be decided by a Google claim that Facebook is outdated. Google must deliver on numbers. That is something it has failed on more than once recently.