Dive Brief:
- Facebook plans to enter the search advertising business, CEO Mark Zuckerberg said during the company's Q2 earnings call.
- Zuckerberg outlined a three-part search advertising strategy: Phase one is to build out its Knowledge Graph search; the second phase is making search useful for businesses; and phase three is to unlock search advertising, according to Media Post.
- Zuckerberg said Facebook is in phase two of the strategy right now. Facebook said in its recent Q2 earnings report that it serves more than two billion searches every day.
Dive Insight:
Facebook and Google are the two biggest players in the internet advertising world, with one dominating social advertising and the other dominating search. The two companies make up 76% of all online advertising revenue in the U.S. Facebook trails Google in total revenue by a sizable $20-plus billion a year margin, but the social network is growing much faster than the search giant.
While the companies have largely fought off other smaller players for their massive market share, it looks like the two online advertising giants may be on a collision course. If Facebook's plans to enter the search advertising business come to fruition, they will put the company in direct competition with Google for advertisers' business.
“So when we talk about our strategy, I often talk about how when we develop new products we think about it in three phases. First, building a consumer use case. Then, second, making it so that people can organically interact with businesses,” Zuckerberg said on the earnings call. “And then third, on top of that, once there’s a large volume of people interacting with businesses, giving businesses tools to reach more people … and that’s ultimately the business opportunity.”
Zuckerberg indicated that Facebook is in the middle of that strategy right now. “So I’d say we’re around the second phase of that in search now," he said. "We have a pretty big navigational use case where people look up people and pages and groups that they want to get to, and look at, and search. One of the big growing use cases that we’re investing a lot in is looking up the content in the ecosystem and that is an area that we’re very excited about, which helps people find more content.”
Both Google and Facebook reported stellar earnings results last week, with growth for both companies driven by mobile devices. Facebook reported 59% revenue growth year-over-year, 1.71 billion monthly active users, and that 84% of its advertising revenue comes from mobile. The massive search numbers for the company showcase search's potential as a new revenue stream for the social media giant—and marketing opportunity for brands.
