The Value of Social Network Apps
Posted by Bob Warfield on November 11, 2007
Dare Obasanjo writes a good post about the value of Social Networking applications like iLike (music recommendations) and Flixster (movie recommendations). He correctly points out that the information some of these applications are collecting, in this case music and movie preferences, have huge advertising value. The advantage Google has had is that by looking at the search, they stand a better chance of catching you when you have intent to purchase. That’s the Golden Moment for these things. His objection is that often they show you things that you’ve no intention to purchase ever. His proposal for Facebook is to add actionable events to some of the newsfeeds associated with the apps. For example, when you announce you like a movie, add a link so you can purchase tickets in your area. That’s a great idea, and shows the power of bringing together disparate information in these services. To make it happen, we gleaned the movie preference from a Social App (Flixster) and we presumably gleaned locale from the profile information of the reader. This starts to show what can happen with enough information available. Dare likes it so well he thinks Facebook should buy some of these key properties before a competitor like Google beats them to the punch.
A few thoughts. First, the app owners would be foolish if they didn’t consult Google before selling. Given the size of Google’s war chest versus others, if we’re down to a game of who can buy more Social Network applets, I wouldn’t bet against Google. Interestingly, a poster suggests Microsoft ought to buy the applets to deepen their relationship with FB. That is an interesting move in terms of surrounding FB with different flavors of relationship. I wonder how long it is before FB can no longer resist temptation and builds some of this applet functionality directly into FB? One can imagine some sort of generic product/service recommender and tracker that is universal and ties into the other ad initiatives FB is working with. It would be part of signing up a presence for a brand.
Keep in mind that Google may ultimately enable OpenSocial to play these games and many apps will be written at the very least for both Facebook and OpenSocial, so Google can potentially win there too. All it will take is for them to incent the OpenSocial app developers. It seems to me they can do this by giving them a share of the proceeds from Google search advertising if they allow their info to be used in that way.
This brings me to my final point: I still think Google has the best “Golden Moment” position on the net in terms of catching people with ads when they’re doing searches related to the purchase. The search can either be research (which cell phone do I want?) or comparison shopping (who has the cheapest price on the new DSLR I want?). Either way, it seems they’re closer to the Golden Moment than the Social Networks. I’ve written about this before, but I see the Network more playing the role of creating the appetite, which Google will then satisfy.