Facebook vs. Google+: And the Winner Is …

Here's a pre-IPO breakdown of the how the current social network king and the giant wannabe stack up

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Advertising

Since Google+ and Facebook are both free services, their primary source of revenue is advertising. The site that has the most users — and the right type of users — is going to come out ahead on ad revenue. Going back to that Temple study, something important comes out when the amount of time the average users spends on the respective sites is factored in. For Google+, that’s a minuscule three minutes per month; Facebook users spend 405 minutes per month.

In other words, after people create an account on Google+, they aren’t doing much with it. Facebook is sticky. People log on and stay on. Captive eyeballs make an attractive advertising target.

According to VentureBeat, Facebook should grab 6.5% of U.S. online ad revenue for 2012, for a total of $5.06 billion on the year, but its ad growth rate is slowing. Google has a larger advertising network overall, and with the ability to add a “+1 button” (the Google+ equivalent of Facebook’s “Like” button) to ads across the Google network, it’s trying to boost the value of Google+ to advertisers. According to Google, people are clicking the “+1” button 2.3 billion times per day, contributing data that adds to the value of Google’s search engine and providing additional capabilities for targeted search results

This one is mixed. The “+1” button is proving extremely valuable to Google in general, but Facebook as a platform has far more value to advertisers. It has more users to reach, more time to reach them — and they’re more likely to interact with content.

Bottom Line

Facebook is clearly the dominant social media service today and for the near future. However, it continues to suffer criticism over privacy concerns, and there’s a feeling that it’s becoming a hangout for older users — the next generation may simply bypass it altogether in search of the next great thing.

Will that next great thing be Google’s version? Google+ launched with a great deal of hoopla, and it has attracted a younger crowd, but it hasn’t yet lived up to the hype. It has grown rapidly so far and has an impressive number of users, but it still has just a fraction of Facebook’s user base. Google also has the advantage of the Android platform (which activates 850,000 devices a day), representing a huge group of potential Google+ users when the service is fully integrated into Android — and you can bet it will be.

The problem is, Google+ users don’t seem to log on very often. Google is trying to boost its foray into social media, but if the results aren’t there, the company has a reputation for cutting underperforming services. Remember Google Buzz? The 2010 attempt at building a social network around Gmail was a big thing — until Google killed it at the end of 2011.

Eventually, something is going to knock Facebook off its pedestal to become the new King of Social Media, but don’t look for Google+ to be the one. However, killing Facebook isn’t necessarily Google’s endgame. Google+ and the “+1” button equal a critical addition to Google’s core search-ranking algorithm, and that alone may make the service worth keeping.

Another possibility (at least as long as Google+ can figure out its boys’ club problem) is that Facebook remains the “social” social media website, while Google+ becomes the professional social networking site. In that case, when all is said and done, it may turn out to be more of a competitor to LinkedIn (NYSE:LNKD) than to Facebook.

So, don’t expect Facebook to go anywhere in the short term, although its days of exponential user growth are over. And Google+ may well be around for the long haul, regardless of what effect it has on Facebook.

As of this writing, Brad Moon doesn’t hold any securities mentioned here.

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Article printed from InvestorPlace Media, http://investorplace.com/2012/05/facebook-vs-google-and-the-winner-is/.

©2014 InvestorPlace Media, LLC

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