FB’s Business Model Matters

Source: RWW, Nov 2012

Facebook has a business model problem.

To be sure, Facebook will rake in $5 billion this year. But Facebook’s long-term problem is that it is trying to make money via advertising, even though Facebook simply isn’t a very good vehicle for advertising.

And while there are things Facebook could do to make itself into a nice platform for advertisers, those things would drive away members. That’s the conundrum.

Google is approaching social in a different way.

Google lets you – not some algorithm – control which posts you see. And Gogle doesn’t put ads in your Google+ news feed.

Instead, Google pulls info out of Google+ and uses that data to improve the results people get when they do a search.

Google argues that ads work best next to search because people doing searches have reached what’s known as “the moment of commercial intent.”

Google is using social to boost the effectiveness of its existing search business. Facebook doesn’t have a search business, so it is stuck jamming ads into your social space, which nobody likes.

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