Facebook and Google: Intent vs. relevance

Full credit to Eric Eldon of VentureBeat for the nice piece of link-bait that he posted this morning about how Facebook “could” be worth $100-billion, a topic that has spent the better part of today climbing up Techmeme. But it’s too bad that the bubble-math in the headline (which Eric actually blames on Lee Lorenzen of Altura Ventures, a Facebook-only VC, based on this post) tends to obscure Eric’s point.

The point (I think) is that a targeted advertising network — based on Facebook’s database of user profiles and demographic data, combined with the use of cookies that would generate ads even outside of Facebook’s network — could produce a much higher payoff than the site’s current attempts at advertising are doing. I’m not an advertising guy, but I think there is probably a lot to that theory (although there are flaws).

Unfortunately, everyone wants to talk about how Facebook is building “a Google killer,” and how the search-advertising giant with the $200-billion market cap is “afraid” of the as-yet-unreleased Facebook ad program — as Lee Lorenzen argues here. That’s almost certainly nonsense, of course. Still, there is a potential battle of sorts heating up.

I think of it as a battle between “intent” and “relevance.” Google’s power comes from the fact that when you search for a keyword, there’s a good chance you’re going to be open to advertising that is related to that — i.e., your search betrays your intent. Facebook’s power could come from its knowledge of your profile, your behaviour, your demographics, your interests. That could make its ads more relevant.

Even if there is such a battle, does that suddenly make Facebook worth $100-billion, or $10-billion, or even $1-billion? Who knows.

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