Facebook might make money from its search tool, analysts say
But
don't expect that to happen right away, analysts say, and Graph Search
won't challenge Google's dominance anytime soon either.
Facebook CEO Mark Zuckerberg unveils Graph Search during an event at the company's headquarters.
(Credit:
James Martin/CNET)
Still, Facebook likely won't make much money from the tool in the near term as it focuses on user experience, analysts added, and people shouldn't expect Facebook to actually challenge Google's search dominance anytime soon.
Related stories:
Bank of America Merrill Lynch analyst Justin Post noted today that "search could help increase engagement on Facebook, either through making information on Facebook more accessible or, possibly, encouraging entry of more likes, posts and interests data."
That, in turn, could result in "some highly monetizable category suggestions for Graph Search," like nearby restaurants and games, Post said, and it should be easy to incorporate commercial search results through Facebook's partnership with Bing.
"Given Facebook's large scale, getting users to search on the platform is a significant opportunity; if Facebook can generate just one paid click per user per year, the company could add $500 [million] in annual revenue," Post said as he boosted his price target for Facebook shares to $35 from $31.
Meanwhile, Sterne Agee analyst Arvind Bhatia said Graph Search should enable Facebook to expand beyond display advertising into the much bigger market for search advertising. He also raised his target price and said yesterday's announcement expands Facebook's longer-term growth opportunity. He added:
Long term, we think this will be a big revenue opportunity. We believe users will engage strongly with the product, which should result in better monetization overall as users spend more time on the platform. The Bing partnership for Web search received less focus during the presentation. However, we think this could perhaps represent just as big an opportunity from an incremental revenue standpoint, depending on whether Facebook users adopt the Facebook/Bing integration for general Web searches as a replacement for their current preferred search engine of choice. In the long run, we would not be surprised if FB developed its own search engine to crawl the wider Web.
However, analysts noted that overlap with Google appears to be low, at least for the time being. Graph Search is likely a bigger threat to Yelp and IAC/InteractiveCorp's Match.com, they said.
Shara
Tibken is a staff writer for CNET focused on consumer tech news. She
previously wrote for Dow Jones Newswires and the Wall Street Journal.
She's a native Midwesterner who still prefers "pop" over "soda."
18 Comments
Facebook Unveils a New Search Tool
By SOMINI SENGUPTA
Jim Wilson/The New York Times Mark Zuckerberg at Facebook’s event on Tuesday.
At an event at company headquarters in Menlo Park, Calif., Mark Zuckerberg, Facebook’s co-founder and chief executive, announced a tool the company had spent over a year honing. He called it “graph search,” and said it would be available to a limited number of Facebook users on Tuesday — in the “thousands”— and gradually rolled out to the rest. It would enable Facebook users to search their social network for people, places, photos and things that interest them.
That might include, Mr. Zuckerberg offered, Mexican restaurants in Palo Alto that his friends have “liked” on Facebook or checked into — though not status updates as yet. The tool might be used to find a date, or a job, Facebook executives said. “Graph search is a completely new way to get information on Facebook,” Mr. Zuckerberg said.
What he didn’t say, but which was clear, was how it would try to elbow out other companies that allow you to search for other things – LinkedIn for jobs, Yelp for restaurants, Amazon for gifts to buy for a friend and, of course, Facebook’s biggest rival on the Web, Google, which dominates Web search. Facebook is staking its bet on the sheer volume of data that it has access to; it is hoping that its users will find what they’re looking for on Facebook itself, without having to go to the rest of the Web.
And that is how Mr. Zuckerberg distinguished Facebook search from Google search, which sends you to other sites. The Facebook search tool is meant to keep you inside Facebook itself. “Web search is designed to take any open-ended query,” Mr. Zuckerberg said. “Graph search is designed to take a precise query and return to you the answer, not links to other places where you get the answer.”
Mr. Zuckerberg sought to reassure Facebook users that their posts and pictures would be found only if they want them to be found. Before the new search tool rolls out, users will get a nudge: “Please take some time to review who can see your stuff,” it will read. Facebook tweaked its privacy controls last December.
Mr. Zuckerberg said Tuesday that initially, photos posted on Instagram, which Facebook owns, would not be part of the database of photos that can be searched. He did not specify how soon graph search would be available to those who log in on cellphones.
The search tool is plainly designed with an eye to producing profits. If done right, said Brian Blau, an analyst with Gartner, the Facebook search tool could offer marketers a more precise signal of a Web user’s interests than a keyword on Google. “It’s going to lend itself to advertising or other revenue-generating products that better matches what people are looking for,” he said. “Advertisers are going to be able to better target what you’re interested in. It’s a much more meaningful search than keyword search.”
Search earns the lion’s share of advertising revenues on the Web, which is why Google makes nearly 10 times more money than Facebook on a yearly basis.
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A Facebook Billionaire Wedding
Facebook Billionaire Wedding
Back Feb. 11, 2012 file photo, Sean Parker, left, and Alexandra Lenas arrive at the Pre-GRAMMY Gala & Salute to Industry Icons with Clive Davis honoring Richard Branson in Beverly Hills, Calif. Facebook billionaire Sean Parker’s lavish, $10-million Big Sur wedding just got even more expensive. The California Coastal Commission and Parker on Monday said they reached a $2.5 million settlement to pay for coastal conservation programs after the Napster co-founder built a large movie-set like wedding in an ecologically sensitive area of Big Sur without proper permits.
Back Feb. 11, 2012 file photo, Sean Parker, left, and Alexandra Lenas arrive at the Pre-GRAMMY Gala & Salute to Industry Icons with Clive Davis honoring Richard Branson in Beverly Hills, Calif. Facebook billionaire Sean Parker’s lavish, $10-million Big Sur wedding just got even more expensive. The California Coastal Commission and Parker on Monday said they reached a $2.5 million settlement to pay for coastal conservation programs after the Napster co-founder built a large movie-set like wedding in an ecologically sensitive area of Big Sur without proper permits.
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