Sunday, March 4, 2012

Facebook, Google+ and the Race to Monetize Your Identity

“Right time, right place” is how industry insiders sum up the potential of online advertising. It’s a tantalizing idea – that online marketers’ ads can appear at the precise moment the viewer is most receptive. Any company that could make that holy grail of advertising a reality, well, it would be worth 100 billion dollars!
Wall Street hopes that Facebook can deliver on the promise of “right time, right place” because of the scale, depth and quality of the data Facebook collects from its users. Facebook combines the demographic information of the 845 million people who use its service with a relentless stream of Likes, Check-ins, comments and other actions that give it a textured understanding of exactly who those people are. Facebook’s data is unique in that users actively share their identity with Facebook, then utilize the site’s many functions to fine tune their image. This stands in stark contrast to its competitors in the display advertising business like Google, who observes users as they passively share information. Facebook shows an ad to the real you, while Google shows an ad to who it infers to be you.

The difference in quality between Google and Facebook’ data was on stark display this past month with the amusing discovery that Google thinks just about everyone is a 35 year old tech-savvy male. Google is all too aware of its inferior data and has made its pursuit of your identity the company’s number one priority. In fact, all of Google’s employee bonuses are tied to the success of its social network Google+. (Click here to see who Google thinks you are.)  

The quality of Facebook’s user data is so superb that it warranted a $100 billion valuation from Wall Street.  “Right time, right place” may be the holy grail of advertising, but given Facebook's $100 billion valuation, that may be exactly what Wall Street is expecting.

Read More:  Facebook IPO Cites CEO Zuckerberg Among Risk Factors

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