Why Facebook Inc. Should Terrify Google Inc. Investors
The first age of online content was indisputably ruled by Google Inc. (NASDAQ:GOOG). But that era is crumbling under the onslaught of innovation from Facebook Inc. (NASDAQ:FB). The social media web site has expanded its video platform and sharing algorithms, driving enormous traffic to media sites.
These are big shifts for everyone who creates content online, myself included. Thinking of media web sites as online newspapers is shockingly outdated, mainly because no one actually browses articles on a home page anymore.
We saw people change the way they found and consumed information. The first incarnation of digital distribution was the web search. Plugging keywords into a Google search field became the link between content and audience.
Over time, however, search-generated traffic is giving way to social media sharing. Page views are now coming through apps like Twitter, Facebook, and LinkedIn. (Source: Fortune, August 18, 2015.)
Most people mistakenly think Twitter is the best avenue for creating traffic. However, Twitter is social media built for speed and continuous dialogue. Once a tweet slips too far down the dashboard, it is no longer relevant.
The king of virality—of content sharing in general—is Facebook.
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Facebook’s video platform is posing the first serious challenge to Google’s YouTube division. As recently as last year, YouTube had an effective monopoly on web-based videos. But Facebook’s traffic is growing at an astonishing pace.
And that’s the story all over. From picture to video to articles, Facebook simply enables users to share content in a way that maximizes traffic to media sites. (Source: Re/Code, July 1, 2015.)
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Videos begin to play automatically (without sound) as users scroll down their FB Timeline, often making people curious enough to watch the whole clip. Likewise, clicking on a linked article no longer sends you out of the Facebook app. The company devised an in-app browser which provides a very pleasant reading experience.
With well over a billion users, Facebook can offer content producers a massive audience, but now they’re taking it a step further. Starting this fall, Facebook will actively share ad revenue from videos with the organizations that create them.
That isn’t a shot across the bow at YouTube and Google; it’s aimed squarely at them.
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I don’t know how Google will counter the Facebook “shareability” factor. According to a traffic analytics firm Parse.ly, Google accounts for only 38% of traffic to their bundle of media outlets. By contrast, Facebook was responsible for 43% of the traffic.
As static numbers, the difference between Facebook and Google seem petty, but Facebook is growing while Google searches have hit a ceiling. The trends show a clear passing of the torch.
To be clear, Google is still the archivist of the internet and dominating the search engine space. Facebook’s growth is partnering with media outlets to facilitate content distribution. The latter is a concentrated strategy that likely provides higher margins.
We’ll need more time for the situation to play out, but I like Facebook’s odds. Much in the same way TV stations act as distribution hubs for shows, Facebook is wrangling deals from ESPN, Fox Sports, and Funny or Die. There is a quantifiable return to this strategy.