Google is still the biggest, baddest online advertising company on the planet. Its $2.9 billion profit last quarter, announced yesterday, was almost as much as Facebook’s revenue for all of 2011.
But Facebook has something important that Google doesn’t, and it scares Google’s pants off: Facebook knows who you are, to an incredible level of detail. Because you tell it.
As you’ll see, that allows Facebook to tailor its ads to a much finer set of users than Google’s search ads currently allow. That’s why Google is pushing so hard on Google+.
All that profile information you’ve filled out over the years on Facebook? That’s not just there for your friends and colleagues to see, or for self-expression. Facebook is also able to use much of it to target the advertising you see on Facebook. (And, eventually, potentially all over the Web, the way Google does.)
The easiest way to see how powerful this is would be to take a quick spin through Facebook’s ad-creation tool. It’s remarkably simple and straightforward. Just figure out what your ad is for and give it a title, some body text and an image.
And then you’ll get to the magic: Facebook’s targeting page. Here, you can narrow your ad’s target by an incredible basket of options. Location, age, gender, precise interests (as volunteered!), Facebook connections, sexual orientation, relationship status, languages, education and specific workplaces.
So if you want to reach the 100 people on Facebook who live in California, are between 18 and 36 years old, like “space” and work at Apple or Google, you can. Amazing.
Here’s what it looks like:
Google’s search advertising product, on the other hand, only offers a fraction of this targeting. You can target by location, languages and devices. But it mostly comes down to keywords: What are people searching for or looking at?
That’s useful information, for sure, especially when you’re selling something. But it would be nicer to also be able to target much deeper, the way you can on Facebook.
That’s why Facebook, even though its business is much smaller than Google’s today, represents such a threat to Google. It’s only a matter of time until Facebook expands its advertising scale by opening the equivalent of “AdSense” – self-service ads for any site, using Facebook’s superior targeting capabilities. That actually goes directly after Google’s core business; that could hurt.
In the meantime, Facebook has a huge and growing set of data about its users that Google just doesn’t. Heck, many (most?) of Google’s search users aren’t even really “users” at all – they’re not logged in, they don’t volunteer any personal information, etc.
And that’s why Google+ is such a crucial project for Google – to get people logged in, sharing their information and interests with Google – not because Google suddenly wants to be social for the fun of it, but because it’s crucial to catch up in ad targeting before Facebook becomes even more of a threat.