When Facebook started out, their problem was getting more users. That goal is now evolving to a more mature one: getting users more engaged. In a recent talk with some Facebook people, they mentioned that an important metric for them is users that are active in 6 out of every 7 days. Facebook is constantly tweaking its experience to increase engagement and to drive people back into Facebook.
A major problem is that we’re not on Facebook all the time. Stuff is happening in our social circles when we’re not looking and we remain ignorant of it until we decide to look at our feed again. A Facebook web browser would go a long way towards solving this problem. Ever since Facebook announced the embeddable Like button in 2010 they’ve started a process of becoming a true Internet platform rather than just another destination website. A browser is their logical next step and would help them solidify their position as the “window” through which we interact with the online world.
One easy example that will drive people back to Facebook is always-on notifications. Just like Google gives us Google Plus notifications in Gmail and their other apps, Facebook can give us notifications everywhere. They can also take this further and have always-on chat and a Like button that’s always there on the toolbar, regardless of a site supporting it.
So what happens when Facebook releases this browser? The answer is that it will explode. People try Facebook’s stuff all the time—just look at the adoption rates for their iPhone and Android apps. Facebook users depend on accessing Facebook and are always looking for the best way to get their content. Of all the big tech companies, Facebook has the biggest chance of launching a browser that will be an overnight success. And with technologies like WebKit, it’s easier than ever to build a standards-compliant, well-performing browser.
Facebook has the biggest chance of launching a browser that will be an overnight success
Let’s get into the heart of the issue. The main monetization for browsers is search partners (at least for Firefox and Opera, as Safari, Chrome and IE are products of larger companies). For example, Google pays Mozilla to be the default search engine for Firefox. The reason that they can do that is search advertising. When someone does a search, there’s a chance they might click on an ad. Multiply this chance by the number of Google’s users and you come up with 97% of Google’s annual revenue, or about $28 billion.
Simply put, having a popular search engine would be a gold mine for a company like Facebook. And while it’s a stretch for them to invent a new search engine and slowly watch it grow, a popular browser with that engine as the default would solve the adoption problem for them. Imagine that, within a year, a modest 25% of Facebook users use their browser. That would equate to about 200M users; all of which are using their search.
So does Facebook need to write an engine from scratch? That proposition would probably not earn you any applause at a random Facebook board meeting. Search engines are costly and challenging to develop and maintain. Google and Microsoft have been at it for years. But wait – Facebook already has a relationship with Bing. Bing results appear in Facebook searches (though not prominently) and Bing has social features built in, courtesy of Facebook. The natural path is to partner with Bing on this project as well, and use the engine to power Facebook Search.
Facebook is an excellent source of social data. They already use this data to target ads within Facebook. In theory, ads that are targeted at people with specific interests (like a wine ad for people who Like wine) seems like a phenomenal business. Sadly, this is far from true. The problem with Facebook ads is lack of intent. When people see an ad on Facebook, they’re not really looking to leave Facebook, so they ignore the ad. Compare this with search ads: they have a ton of intent. If someone is searching for “gourmet marshmallows” and an ad pops up for a marshmallow delicatessen (or something real), then the user has a high probability of clicking on it.
When people see an ad on Facebook, they’re not really looking to leave Facebook, so they ignore the ad.
Now, imagine what Facebook could do with a search engine. They get the intent, and they can do something that Google and the others can’t do, which is sprinkle their social targeting on top.
So the reason that socially targeted search ads are so interesting is because of how the “Cost Per Click” (CPC) model works. Here’s a quick breakdown for those of you not well versed in Internet advertising:
Here’s an example of how social data can make CPC ads way more effective. Let’s say it’s Mother’s Day and I’m out to buy a gift for my mom (as every good son should). I search Google for “mother’s day gifts”. Since people searching for this term likely have a strong intent on buying something, this is a highly coveted market (lots of different advertisers each paying a buttload).
Google doesn’t know much about me (let alone my mom) so they’ll probably give me a random crop of local businesses selling Mother’s Day stuff. But a Facebook Search ad could look like this:
The difference is that Facebook knows that my mom likes Godiva chocolate. They have that info, so an advertiser could target “people searching for ‘Mother’s day gifts’ and whose mother likes Godiva”. They could also run separate ads for 5 other popular chocolate makers.
What ad do you think I’m more likely to click and convert on?
Another example that would work is a camera store running two ads: one for people who have friends that like Nikon, and another for people whose friends are Nikon aficionados. When people search for “cheap dslr” you can show that 5 of their friends like Nikon so they should probably go ahead and buy a Nikon camera. Again, much more effective than a random ad.
And we’ve just explored the tip of the social iceberg. Think about social coupons (5% off for people who Like us) and social referrals (get $50 store credit when you refer a friend). Facebook can even track status updates like “I’m in the market for a new car” to find people with a high intent of buying cars.
Chrome is working for Google. It gets people to use Google services more. Why shouldn’t Facebook do the same? People will be more engaged. It frees Facebook from dependency and gives them a player in the lucrative browser space. Best of all, it will be a stepping stone for them to enter the search advertising market. The ads will be more effective (and thus less annoying), Facebook gets more money, Bing gets more traction. Everyone wins, right?
Well, everyone except Google. If I were them right now, I would start worrying.