Prediction: Facebook Will Enter the Search Market Next Year

http://techcrunch.com/2011/08/26/prediction-facebook-will-enter-the-search-market-next-year/

by ayanb • 15 years ago

25 21 15 years ago

He is an angel investor in media and e-commerce companies.

I wonder if he has invested (or plans to invest) in Facebook? Full disclosure would be nice.

Next year, search advertising will be a $15 billion market in the U.S. alone, growing by 14 percent, according to eMarketer. And, if Facebook can capture half the share of that market that Google has today, it could easily add an extra $25 billion or even far more to its value.

Is it just me or does the math not add up. If search advertising is $15B next year, how can Facebook add $25B of value if it takes 50% of the market share? I assume he means globally (versus the $15B residing in the US alone), but with those kinds of numbers, he's got to back it up somehow otherwise he's just pulling them out of the air.

erikpukinskis• 15 years ago

If Facebook were to get similar margins to Google, then they'd earn $2B in profit on $7.5B in revenues. $25B of value on $2B profit is a 12.5 P/E ratio, which is quite conservative, given search is still an emerging market, and quite strategic for them.

joebadmo3• 15 years ago

It's obvious that FB would want to enter the search market, and the post doesn't even mention the biggest reason: search ads are more valuable than social ads.

And I think the obvious reason for that is: Ads on a social network are basically spam. They're explicitly trying to distract you from what you're doing. Search ads augment your search and harness your intent. Google gives you things you might actually be looking for when you're looking for it.[1]

And also, I don't think social search is as important as people think. The whole point of harnessing the power of the entire web for search results is getting stuff that we didn't have access to before the internet. I've always been able to ask my friends their opinion. The web lets me ask experts on the specific subject at hand.

Why wouldn't FB want to do this? Because FB doesn't really want to send people away. They never have. Everything they do is designed to keep you on the site, and their external stuff is designed to draw you in.

Also, it's super hard (which the post does mention). Which makes me think it's way more likely that Google will eat FB's lunch than the other way around. Seems to me that Google already has a lot of FB's tech/infrastructure built, while FB has much less of Google's.

[1]: I've written about what a weird position this is, though: http://blog.byjoemoon.com/post/7590977101/googles-existentia...

brg• 15 years ago

Entering the search market would require hundreds of employees and a significant upfront capital expenditure. Without going public, I don't think there is any question--they will not enter search.

If they go public, then it depends on the opportunity costs. Is there a better place for ~5Billion dollar investment? Probably yes. Two things come to mind; an ad distribution network and a 'social' browser.

finisterre2• 15 years ago

Facebook don't need to take on the huge capital cost of launching a search engine. They can take advantage of the fact that Microsoft already did.

Facebook can enter the search market by deepening the connection between its data and Bing's technology, and then making some UI changes.

tytso• 15 years ago

Um, and if they do that, who takes the profits from the search engine? Microsoft, who has "invested" billions and billions of dollars and who would presumably like to recoup some or all of their losses, or Facebook? And if that's the case, how much value does that add to Facebook again? It's an interesting and open question, but methinks predictions that Facebook would get all of the profits, when Microsoft has put in the all or most of the capital costs of a money-losing search engine system, seem to be a little hard to believe, don't you think? And that's of course assuming Microsoft can be successful in search, which has yet to be seen at least from a business perspective...

untog• 15 years ago

Microsoft may be less than pleased, given the level of Bing integration right now.

In fact, Bing already exists as a Facebook-augmented search engine. I don't use it, but I find the concept fascinating as it's one of the few places that is using Facebook's massive data store of all the pages and sites that users have 'like'd.

MatthewPhillips• 15 years ago

Good point. If people aren't using Facebook/Bing, what makes you think they'll use Facebook search? Unless they replace the front page with a search box bing/google style no one will notice the difference.

trbecker• 15 years ago

Speculation. And a bad idea. Facebook is good in social "notworking", and competing with Google in Google's territory is not a good idea. Since we're in the field of speculation, I predict a huge loss of money.

colintan• 15 years ago

I agree. Facebook's strategy ought to be to lock down and defend their niche in social networking. The signs seem to indicate a greater emphasis on connecting person to person: I predict more location and mobile-based features, and more aggressive expansion in developing markets.

Only then would a search product make sense, though it would be tempting to rush it out as a partnership with Bing.

pak• 15 years ago

This whole article is predicated on "social search" being better than pagerank-scored search, which is only sometimes the case.

Sometimes I care what my friends think about a search query, e.g., "sushi restaurants near foo." It might help me to know that my friend Bob, who I trust, has been somewhere and thought it was good.

Sometimes I do not care at all what my friends think about a search query, e.g., "medulla oblongata." In fact, showing results that my friends might have liked in connection with that phrase may distract from the scientific information I am looking for, especially if they are pages of quotes from Fight Club.

Being able to distinguish this intent, and putting a good UX on top of it, is what Facebook needs to do to make a significant entry into the search market. (I'm not holding my breath.)

joebadmo3• 15 years ago

Honestly, even the sushi restaurants example is questionable to me. I think a better algorithm would check to see what/what kind of restaurants I liked in the past, compare that with other people with similar taste, and give me a suggestion. Netflix recommendation for food.

It's what I've always wanted from Yelp and Urban Spoon, but never got. It seemed like Google's Hotpot was going there, but that seems to have fizzled. I guess it's not one of the arrows that Larry Page chose.

But back to the point, that's not a social algorithm. It's not a page-rank one either, but I'd expect Google to be better at this than FB.

c0riander• 15 years ago

Kind of like Ness? "Pandora for restaurants" according to GigaOm: http://gigaom.com/2011/08/25/ness-restaurant-app/

Haven't tried it yet but saw it on HN just yesterday!

troymc• 15 years ago

The idea of using social graph data, somehow, in calculating search relevance is a nice idea, but you have to avoid incorrect assumptions like "You will like the things your social connections like."

StumbleUpon has used social graph data for a while, to make website recommendations (but they're not a general-purpose search engine):

http://www.stumbleupon.com/technology/

Ness is seems to be using social graph information, in a clever way, to make restaurant recommendations:

http://www.building43.com/videos/2011/08/25/ness-personalize...

To me, the taste graph (a phrase coined by Hunch, I think) is much more interesting than the social graph, as an extra source of relevancy information. It you know my tastes, and you know the taste graph, then you can say what else I might like (with probabilities).

Will Facebook or Google ever use these additional sources of relevancy information? My bets are on Google.

joshontheweb• 15 years ago

Facebook has already entered the search market. Any pages that have like buttons and the proper meta tags are index and can be reached through search in Facebook.

alextp• 15 years ago

Search is about taking you to the place you want to go to; facebook really wants to be the interesting place.

Their whole strategy seems to center on making sure everything in the web is a gateway to facebook but that facebook itself is where the fun is at. See for example those boxes websites can use saying "such and such friend liked such and such article"; they take you to facebook, never out of it. I really don't see entering search as something they should even want to do.

puredemo• 15 years ago

I said the same thing when they came out with the "like" button last year. Liking something is just a new-fangled way of doing page / domain ranking.

jamesaguilar• 15 years ago

I guess we'll be seeing this prediction every year until it either comes true or Facebook ceases to exist as a company.

Sigi• 15 years ago

.. and will probably fail just as google failed/ing? with social networks.

If you want to dominate an existing market, you have to put everything you have into into it (+ new idea), and that might not be enough.

Prediction: Facebook Will Enter the Search Market Next Year

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