Facebook (NASDAQ:FB) introduced Graph Search earlier this year, a feature that enables users to find new friends and get restaurant recommendations. Though Facebook's aim is to challenge Google (NASDAQ:GOOG) in the search market, investors didn't see this as a threat. Facebook didn't just stop there, the company purchased Atlas from Microsoft (NASDAQ:MSFT). So, since the start of 2013 Facebook has launched Graph search and purchased Atlas, Good enough to take on Google?
Facebook has to focus on a lot of areas for things to get going its way.
Unlike Google, Facebook does not provide any tools for advertisers to measure their returns on their Facebook Ad campaigns. Google does provide data in the form of keyword research, thus enabling its clients to get a detailed report on how their audiences reach their websites via Google. Facebook does not provide any such data.
Facebook's recent acquisition Atlas enables marketers to see how users use Facebook Ads. With the help of Atlas, marketers can now compare Facebook campaigns with TV ads and other such media advertisements. All of this can be done using websites outside of Facebook which is an added plus point. Once marketers start implementing these tools, Facebook can monitor their campaigns outside of Facebook and perform real time tweaks to their own advertisement strategies. If everything falls in place, Facebook would be able hike its ad prices to the same level as Google.
Gokul Rajaram (Atlas product director) has stated in a recent article that "current ad serving systems do not support mobile". Keeping this in mind, Facebook is already working on an ad serving solution for mobile devices. With the majority of the users accessing their socializing through portable devices, Facebook is now in the driving seat to dominate the mobile ad market. Atlas provides marketers detailed analyses and comparisons of ad campaigns between mobile and desktop providing Facebook the necessary data to improve on their current strategies and try new ones.
As of now mobile ads contribute to a quarter of a company's ad revenue, this is because it's priced at half of what desktop ads are priced at. Once Facebook is able to provide data on the significance of mobile ad campaigns, things will take a turn.
External Ad network
In 2007, Google bought DoubleClick and Microsoft replied with a quick purchase aQuantive. Both of them bought these companies to switch from just search advertising to also display their adverts on other websites. Atlas was a part of Microsoft's aQuantive purchase. Facebook has to complete what Microsoft has been trying ever since it purchased aQuantive, it too has to create an ad network capable challenging Google.
Lucy Jacob, COO of Spruce media stated that an external ad network could help Facebook generate 3x ad revenue with the present traffic on its website. Unlike Google, Facebook has its "like" button on almost every webpage these days (including this one, feel free to click on it). Users are directly telling Facebook what they're interested in, club this with Atlas and you have an external ad network system that just cannot fail.
Atlas is not a final product though, there is a still a lot of engineering that has to be done for it to become a complete ad server. Facebook has to work on advertisement value on its own website before it asks for space on other websites.
How big a threat is this to Google?
Google is probably well aware of the fact that Facebook is the only company that can knock it out cold. Ad revenue is what Google thrives on, it has even launched a successful mobile operating system "Android" to keep up with the changing internet usage trends. Google's biggest challenge as of now is to retain its existing clients, all it has only got is keyword searches and email messages to fetch user interests, whereas Facebook has billions of users telling it upfront their likes and dislikes. Google is still trying to get Google+ going, but in all honesty it's not helping them much.
I wouldn't be surprised to see Google lending its AdExchange services to Facebook, this would help it by ensuring that marketers are using analytics tools and wouldn't knock them completely off their game. Giving Atlas a chance would allow marketers the option of comparing Google ads with not only Facebook ads but other marketing campaigns as well, it's better Google stays away from such risks.
Microsoft's Atlas and Facebook's Atlas are two completely different stories, Microsoft never threatened Google with online ad campaigns but Facebook can push Google completely off the wagon. Expect more moves from Facebook as it is the only ones with the potential to finally compete with Google in internet dominance.