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Wednesday, April 14, 2010

Facebook is stealing Adsense Revenue

Just before I left Google, I heard rumors that if you told your manager that you were leaving to join Facebook, you would be escorted out of the building right away. What's interesting to me about this rumor is that it was quite believable, and also despite all that publicity about the Apple-Google rivalry, there was no such rumor circulating about that happening if you were to leave Google to join Apple.

Now, first of all, I will state my anti-Apple bias: I think that Apple would be a horrible place to work if you're a Googler. It is in every sense the anti-Google in outlook. I have friends who worked there (and one who still does), and I know for one thing it would drive me crazy. People tell me that there's so much secrecy that when you have to debug something, getting enough information to even do your work if the bug spans up or down one level of abstraction would be a challenge. And obviously, there's a lot more secrecy than there is at Google, even for internal employees.

On the other hand, while Apple might be able to start establishing ads on mobile devices, Facebook is already stealing ad revenue out of adsense. How? Take this blog for instance. I run Adsense Ads on the side and bottom (unobtrusive, but valuable if Google does a good job of monetization). The blog, however gets syndicated to various places: Buzz, Friendfeed and Facebook. The first is controlled by Google, the second doesn't try to monetize, and in fact helps drive traffic to the blog. The last, however, strips out all Google ads, and replaces it with Facebook ads!

Not only does Facebook see all the revenue that Google otherwise would see, it also grabs all the revenue that I would otherwise see, since Google shares Adsense revenue with the content provider (in this case, me). You can imagine a world in which all content thus gets syndicated through Facebook and Google's content ads network goes to zero.

So if the rumors are true, then indeed Google is terrified of Facebook, and has every reason to be. The potential for disruption to its content ads network is huge. The caveat, of course, is that the high traffic sites which have lots of traffic clearly have a disincentive to syndicate their content through Facebook, so it's only low traffic sites like mine that are affected by this. My guess though, is that Facebook will eventually provide some sort of revenue sharing arrangements with the high traffic sites, at which point it would really start chipping into Google's content ads network.

Then of course, there's that other insidious threat: Facebook is currently in the position Google was 6.5 years ago, being able to offer hot pre-IPO stock to potential employees. This is a cycle in Silicon Valley, however, and the correct response is to properly compensate your employees rather than threaten to escort them out of the buildings when they give notice. I doubt if upper-management at Google is unaware of that, given how recently the shoe was on the other foot.


Otto said...

You shouldn't be syndicating whole content to Facebook in the first place. Just put excerpts there and use it to drive traffic back to your site.

Anonymous said...

Agree with Otto. Why should you syndicate the entire content to Facebook? If Facebook was going to give some revenue to the poster, fine, else we should monetize ourselves using Adsense or whoever

Piaw Na said...

Because my audience is also on Facebook. Since the blog generates relatively revenue, it's more important to me (for now) to have my friends read the material in whatever form is convenient for them than for me to maximize revenue. It is, however, a bigger concern for Google.