If you were one of the investors who went in on Facebook during its IPO, your initial tears have probably dried by now. Sadly, your wailing has probably been replaced by a muffled resigned whimper now as you shake your head at the almost daily declines of the social network site’s stock. You are probably wondering why this massive social network site with 900 million users the world over isn’t soaring like an eagle right now. In other words, you might be asking why isn’t Facebook like Google.
Well, the truth is that it is fast becoming clear that Google might truly prove to be a unique internet company in terms of its ability to generate cold hard cash. Not only does it rake in the cash, it does so relatively easily. Indeed, many people compared Facebook to Google in the run up to the former’s IPO. On the surface, both companies share many similarities at their pre-IPO stage: they both had hundreds of millions of users and they are both aware of the importance of highly targeted ads and have rolled out ad targeting technologies.
But that is where the similarities end. Indeed, when it comes to revenues and revenue trajectories, the difference between the two companies is like day and night. First of all, marketers would chuckle at you if you compared Facebook ads to Google ads. Two totally different animals. Google’s ads are nowhere close to Facebook’s. While Facebook’s ads can be highly targeted, they lack the power and effectiveness of Google’s ads. Both companies know how to target but that’s where the similarity ends. In the end, Facebook cannot just simply emulate Google’s path to ad riches. It will take a lot more time and effort for it to find out how to get Google-type revenue results from its ads.
Why the revenue difference?
People go to Facebook to find out what their friends are doing. They are not there primarily to look for certain specific information. From time to time, ads might appear which capture their interest. However, for the most part, they are there for their friends, not ad content. Compare this to Google which people use to get information. Since their attention is focused on a particular type of information, they are easier to target with ads and the ads are more powerful since they are context-specific. Google has information-specific intent. Facebook’s intent is not commerce-specific.