Facebook has finally made the jump into search, and while monetization isn’t being discussed as much as the existence of Graph Search itself, it’s only a matter of time before Facebook opens the floodgates currently holding advertisers back.
Analysts are buzzing about Graph Search’s monetization possibilities, with one analyst saying that one paid click per Facebook user could generate $500 million in additional revenue.
Currently Facebook has said that its hands are tied with smoothing out the kinks and solving the issue of scaling the platform up to handle the billion or so search queries that it already deals with. Zuckerberg responded to Graph Search’s monetization outlook by saying, “This could potentially be a business over time.” But we wouldn’t put it past the social network if in the next few months the first advertising unit or module on Graph Search is debuted.
So what will its ad products look like? We’ve got a few ideas on possible monetization schemes.
“Extend this Search”
If you look at the screen shots or the promo video of Graph Search in action, you may have caught a glimpse of the section titled “Extend this Search.” From the looks of it, Graph Search recommends additional results based on your friend’s interests. The module itself reminds us of Twitter’s “Who to follow” box, which promotes relevant accounts to the top of that module. In similar fashion, if you’re looking for a music venue nearby that your friends have visited already (whether they’ve liked the venue’s Facebook page or checked in) there may be multiple results. Chances are that many venues won’t surface on that module. So how can Facebook give businesses an edge over competitors? By offering them the option to slip it a little money for some of that sweet, sweet real estate.
Below the fold of “End of Results” there’s an additional field that says “Still looking? Try these related searches.” Here additional search terms are recommended to the users. While this may be a stretch, one way Facebook can monetize this section is by enabling advertisers to bid on certain keywords. Say you’re looking for “Photos from 2010” and Facebook recommends 2009 as an additional search query, advertisers could bid on the term “2009” and when clicked on and then have a photo from their Facebook page for example appear as the first photo in the results. But should Facebook attempt an ad strategy like this, it would have to be wary that search experience isn’t corrupted by brands.
In a similar manner to the related searches strategy that I mentioned above, paid opportunities for brands to interject their own content that shoot their content to the top of Graph results is a more realistic route. A strategy like this would provide an entirely native advertising experience. Take a look at Twitter’s Sponsored tweets and Tumblr’s Radar advertising program: These ad programs fit seamlessly with the product and aren’t disruptive to the user experience. For instance if you’re searching for photos of friends from a recent skiing trip, you probably wouldn’t mind a photos of skiers and snowboarders from Red Bull’s or GoPro’s Facebook Page showing up.
Sponsored real-time search results
Google introduced the autocomplete real-time search feature, which it coined “Google Instant,” a few years ago and since then social networks Twitter and Facebook (and many other platforms with search) have followed suit. Facebook took their real-time search capabilities a step further with the integration of sponsored search results inside of the search box. To recap, Facebook app developers bid on specific search terms and when users type that query the developer’s app is recommended alongside the search results all inside of the search box. Say you’re typing “bars my friends like in New York City” into Facebook Graph, other bars could pay for a sponsored slot in the search results. Seeing as how Facebook Graph Search comes baked in with an autocomplete feature, we can’t see why Facebook wouldn’t offer recommendations to relevant advertiser’s pages when a similar feature is being promoted already.
Foursquare and Yelp should be very, very worried. One of the highlights of Facebook’s demo on Tuesday was the ability to discover venues and restaurants, and this offers a cornucopia of monetization strategies – most of which can be taken straight from Foursquare’s book. In fact analysts have downgraded Yelp’s financial outlook for this year in the wake of Facebook’s Graph Search announcement.
Restaurants can pay to have their establishment listing show up at the top of the results. This would be in the vein of Foursquare’s promoted updates ad program. Facebook is already talking about how businesses can use Graph Search to their benefit.
It’s about the money
Graph Search might be a new concept, but it’s still search — and that means there’s money to be made. Analysts are upgrading Facebook to $37, meaning that if you believe them now is a good time to buy Facebook stock. The monetization schemes we discussed above are entirely native-based ad products. Keep in mind that the social network has partnered with Bing to support Facebook searches for everything that Graph Search isn’t equipped to handle. We’re sure that Facebook is benefiting from the traffic it directs to Bing, but we just don’t know how much; Facebook’s not spilling the details on that partnership.
Graph Search is a powerful new feature, and one we’ll benefit from. Of course, that means so will advertisers.