It’s only natural in the lead-up to Facebook’s IPO that comparisons are getting made to Google (NASDAQ:GOOG), the tech world’s big IPO of 2004. A lot will be made about the two companies’ revenue, profit, the fanfare prior to their respective IPOs and other similarities. For instance, both were started by university students, both are now Internet giants, both are highly reliant on advertising revenue, to name a few.
But while Facebook is primarily a social networking site, Google comprises multiple lines of business, one of which — Google+ — was created specifically to compete directly with Facebook.
Given the name brand behind that rival social network, it raises several questions what could be key to Facebook’s ultimate success, or failure.
What’s the difference between Google+ and Facebook? How big a threat could Google’s social network be to Facebook? Is Facebook going leave Google+ behind like another MySpace, or is there room for both to co-exist? Where does one have the advantage versus its rival? Does Google even care about Google+’s success as a social network, or might it have other goals for it? Let’s have a look at how the two networks stack up.
How Many Users
The numbers change rapidly, but they currently look roughly like this: 170 million for Google+ to 845 million for Facebook. Google+ is technically still in beta release, and for a time, membership was by invite only. Despite that, it grew rapidly. While Facebook took two years (plus two years at a limited-access level) to reach the 100 million-user mark, Google+ did it in seven months. Google+ is adding 750,000 new users daily. In 2009, Facebook was hitting similar numbers, but its user base growth rate has since slowed and is expected to be 6.6% for 2012 (compared to near 40% in 2010).
Score this one for Facebook.
A Temple University study published demographic statistics about the two networking sites that show some key differences. Google+ is male-dominated (71%), while Facebook is more evenly distributed, but skewed toward females at 57%. Google+ is also preferred by the under-24 age group (50%), while 46% of Facebook users are aged 45 or older (only 14% are under 24).
Other studies identified Google+ users as primarily tech industry workers (software engineers, for example), and Google itself was the single largest employer of Google+ users, Apple (NASDAQ:AAPL), Infosys (NASDAQ:INFY), IBM (NYSE:IBM) and Microsoft (NASDAQ:MSFT) were also at the top.
At this point, demographics strongly favor Facebook. Google+ has been attracting a core group of users — which Bloomberg Businessweek describes as “male geeks from the U.S. — that is notoriously fickle and not known for spending a great deal of time socializing online. Facebook’s more mature, mixed demographic is less likely to jump to the next great thing and much more likely to actively engage online with friends and family.
If Google+ can’t make the transition to a more diverse, engaged user base, it won’t be able to compete with Facebook as a true social media service.
Another win for Facebook.
One of the areas where Google set out to differentiate its social network from Facebook was privacy. It was a good idea — after all, Facebook had been taking constant hits over accusations of sharing-data with advertisers and making too much personal information visible to the world.
Who wins this one? Both companies are constantly in the news for privacy violations. If you define privacy as a lower likelihood of personal information accidentally being exposed publicly, then Google+ has the edge — entire websites are dedicated to the embarrassing personal details people accidentally make public on Facebook. If you define it to be protection of your personal data from commercial use, then both companies have a poor track record.
Ease of Use
Google also set out to keep Google+ simple and had the advantage of listening to Facebook users whine for years about complex and confusing settings. Google+ is more graphical instead of text-heavy, and it uses visual “circles” for setting up rules for sharing instead of Facebook’s lists.
The circle metaphor has resonated with users because it better represents how people socialize in real life (i.e., we move in different social circles). Sharing information via circles makes it easy for Google+ users to tailor what they share by audience. They can remain professional with professional contacts and loosen up with friends or family without worrying about posts or photos bombarding everyone.
Facebook’s Groups feature tries to do the same thing, but it’s less intuitive and by default, people ending up sharing everything with everyone.
Google has also done a good job of integrating features like group text and video chatting with its Hangout feature, and has the advantage of having a direct tie-in with its search engine (where Facebook users typically leave Facebook to search for items to share).
When it comes to games, Facebook is the clear-cut winner. Developers like Zynga (NASDAQ:ZNGA) have made casual games such as Mafia Wars and Farmville Facebook staples. Yes, Google+ has games, but not nearly as many. On the other hand, Google+ is integrated as part of Google’s online application suite, including Gmail and Google Docs, which gives it a productivity advantage.
There’s a chicken/egg effect here that Google needs to overcome if it wants to boost gaming. Game developers want to see active users before committing to a platform, while players want to see compelling games before spending time playing them. Google+ has users, but they don’t spend much time gaming through the service.
Score this one for Facebook — if you’re a social media user who’s there for casual interaction with friends. But Google gets the nod if Google+ is being used for professional purposes.
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.
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.