Social networking has been a death march for large companies. News Corp. (NASDAQ:NWS) got torched on MySpace and Apple’s (Nasdaq:AAPL) own service, Ping, was a disaster.

Of course, Google (Nasdaq:GOOG) is a three-time loser, with failed offerings like OpenSocial, Buzz and Wave. Yet social networking is too important to lose, and Google certainly realizes this. Keep in mind that people spend more time on Facebook than they do on Google. In other words, this is a huge threat to Google’s lucrative advertising business.

The good news is that the company’s latest social networking offering, Google+, is gaining lots of traction. Since its launch at the end of June, the service has reached about 20 million unique users, according to a survey from ComScore.

So can Google+ keep up the momentum, or will it eventually fizzle?

I believe it will become a dominant player. While it probably won’t turn Facebook into a MySpace-style ghost town, Google+ should provide a good alternative — kind of like the choice between Coca-Cola (NYSE:KO

) and Pepsi (NYSE:PEP).

So far, it looks like Google+ has two killer features (and, there may be more as Google will inevitably add new capabilities): First, Circles is a visual way to manage friends, family and colleagues. As a result, there has been little talk about privacy concerns — after all, users have complete control on this.

But can’t Facebook and Twitter offer their own version Circles? Of course, but with millions of users, can these companies add such a radical concept to a service without disrupting things? Probably not. Google+ has the advantage that it doesn’t have to deal with these legacy issues.

Secondly, Google+’s Hangouts is truly cool. It makes it easy to have video chats with groups of people. For example, Dell (NASDAQ:DELL) CEO Michael Dell uses Hangouts for meetings.

Because of the power of Google+, businesses have been clamoring to get involved. However, Google has blocked it because it has yet to release its business version. But this hasn’t stopped businesses from trying to find creative ways to use the service.

Google+ has the potential to be a huge offering because it can be used for personal and business reasons. The result is that celebrities, political pundits and app developers will want to stake their claim (it looks like Google+ will have a gaming platform soon). This should bring a virtual gold rush.

And don’t forget that Google has a pretty good track record with attacking markets. It did this with its Google Maps and in mobile phones. Now it looks like it has found the right formula to go after social networking. And this is absolutely essential if Google wants to protect its lucrative advertising franchise.

Tom Taulli’s latest book is “All About Short Selling” and he has an upcoming book called “All About Commodities.” You can find him at Twitter account @ttaulli. He does not own a position in any of the stocks named here.