Where Google and Facebook are fighting the next monetization battle

Think about something you’ve purchased recently. How did you decide to buy that thing?

In my buying behavior I find that I can split it up into three phases:

1. Need generation. This is what happens when someone shows you something you didn’t know you wanted, but that you immediately get interested in. It might be a TV show (how many people will visit China over the next few years because of what they are seeing on TV at the Olympics. I bet a ton).
2. Research. You’ve decided to buy something, say a new car, but now you need to figure out which one is best for you. Some of the things you do here are to ask your friends, look online for reviews, read Consumer Reports, etc etc.
3. Purchase. You’ve decided what you want, now you go looking for the best place to complete the transaction.

Think through to the best businesses on the Internet. Most that I can think of fit into one or several of these three phases.

Google, for instance, makes billions of dollars from advertisers who want to help you complete a transaction. Do a search for digital cameras, for instance, and there you’ll see ads.

But competing with Google is not really possible, even for a huge multi-billion dollar company like Microsoft.

So, since Google has pretty much locked up the last phase, where is the next Internet monetization battle taking place?

Both Facebook and Google are beating each other up to lock up the next phase: social recommendation and participation.

Google calls this FriendConnect.

Facebook calls this “Facebook Connect.”

Yesterday I visited Facebook to get an up close look at Facebook Connect. I had previously attended the Google FriendConnect launch and even videoed that with my cell phone.

It’s interesting, though, that both of these systems haven’t gotten widespread use yet. It’s also interesting that the teams both struggle to explain why a normal business would use these technologies in their own business’ sites. At least in language that a normal person who isn’t a Facebook addict would understand.

So, let me simplify into a single sentence. Adding social networking features to your corporate sites helps your users through the research phase of the buying process.

These will get widespread use over the next few years as stories come out about successes.

But let’s look at one site that’s very close to what I’m talking about.

Gary Vaynerchuk’s Wine Library.TV.

Now, Gary owns a wine store in New Jersey that is selling about $50 million per year in wine. That means he has the third phase of the buying process nailed down. He’s the Google of the New Jersey wine market.

So, how is he changing his business? (He calls it bringing thunder to the wine industry).

His website and show are TOTALLY about extending his reach into the other phases of the buying process.

His video show creates the need in your head to try more wine. Today’s show gets me to try out some Italian sparkling wine. I had no idea before I watched that show that I needed to try that wine.

Now, notice what happens next. Look at the comments. 136 of them when I wrote this post. You can see the research phase of the buying process happening there. People are recommending different wines than Gary did, or backing up what Gary said, etc.

Now, Gary is WAY AHEAD of most other wine stores. I went to Google and searched for “Wine store” and found wine.com.

But notice that they don’t even get close to creating the need in my head for different kinds of wine that Gary does. Video is unparalleled for creating need for new things.

And, also notice that if you wanted to research Wine that they don’t have the same kind of research community that Gary is building.

Now, could wine.com go past winelibrary.tv in the research phase? Yes. They already are tracking top contributors to their reviews. But using Facebook’s Connect they could go way further: they could tie their contributors into Facebook itself and add all sorts of interesting interactive features. I know that if a friend of mine, like Loic Le Meur, CEO of Seesmic, buys a paticular wine that it’ll be good (Loic has great taste in wine).

By making the site more personal and bringing my friend’s choices into a site like this it’ll convert me to more wine sales at a far higher rate than it does today.

But imagine if Gary’s site did that. He already is 90% there (he’s always on Twitter interacting with people and his video show is just so much more of a personal experience than reading the reviews on wine.com).

If I were a marketer I’d be trying to figure out how to stay up with Gary. Why? Well, do you think his viewers are going to price shop Gary? Hell no. How do you stay up with Gary’s concept? Google and Facebook’s new APIs are the way to do that.

What do you think? Are you thinking of using more social features on your website?

40 thoughts on “Where Google and Facebook are fighting the next monetization battle

  1. Very interesting points and I completely agree with you. People in general buy because they want something. The key is working them through the reasons and convincing them why they want and need your product or service.

    This is especially tough if you are in an industry that people don’t always think they need. Like SEO or Search Marketing. What I have been finding, is people need to be educated first on why the need my services. I can’t sell them something they don’t know they need!

  2. Very interesting points and I completely agree with you. People in general buy because they want something. The key is working them through the reasons and convincing them why they want and need your product or service.

    This is especially tough if you are in an industry that people don’t always think they need. Like SEO or Search Marketing. What I have been finding, is people need to be educated first on why the need my services. I can’t sell them something they don’t know they need!

  3. Hi Robert,

    Found your site while surfing, I immediately fell for it and subscribed.

    Your content reminds me of the stuff published on TechCrunch (another fave or mine).

    As it relates to the Marketing Battle between Facebook and Google, I’d have to say that Google just might win. (again)

    Why?

    Even though I’m a Facebook junkie, due to the company suddenly trying to impose a bunch of restrictions, some dissatisfied users will most likely find GoogleFriend Connect a decent alternative and defect.

    In addition Google’s liberal, sort of anything goes attitude (within reason) continues to attract more people wanting to establish sites/blogs, which of course equals more visitors and more revenue for Advertisers.

    Let’s face it since Google has the Internet Marketing gig on lockdown, it will difficult for ANYONE to pull a coup d’état on them in that arena.

    This is somewhat veering off the subject but what you do think about utilizing NING for the purpose of adding Social Networking features and the Demise of Celebrity Gossip sites?

    Since I’m definitely not a “Techie”, a million thanks to people like yourself and Michael Arrington for creating the Educational Web 2.0 niche.

    Wish I’d known some of this stuff before I started however its never too late to learn right?

    Peace

    P.S.

    My brother who’s a Senior in College (Bus. Mkting Major), subscribes to Fast Company. Great biz resource!

  4. Hi Robert,

    Found your site while surfing, I immediately fell for it and subscribed.

    Your content reminds me of the stuff published on TechCrunch (another fave or mine).

    As it relates to the Marketing Battle between Facebook and Google, I’d have to say that Google just might win. (again)

    Why?

    Even though I’m a Facebook junkie, due to the company suddenly trying to impose a bunch of restrictions, some dissatisfied users will most likely find GoogleFriend Connect a decent alternative and defect.

    In addition Google’s liberal, sort of anything goes attitude (within reason) continues to attract more people wanting to establish sites/blogs, which of course equals more visitors and more revenue for Advertisers.

    Let’s face it since Google has the Internet Marketing gig on lockdown, it will difficult for ANYONE to pull a coup d’état on them in that arena.

    This is somewhat veering off the subject but what you do think about utilizing NING for the purpose of adding Social Networking features and the Demise of Celebrity Gossip sites?

    Since I’m definitely not a “Techie”, a million thanks to people like yourself and Michael Arrington for creating the Educational Web 2.0 niche.

    Wish I’d known some of this stuff before I started however its never too late to learn right?

    Peace

    P.S.

    My brother who’s a Senior in College (Bus. Mkting Major), subscribes to Fast Company. Great biz resource!

  5. I am just stepping into the social networking features and
    google is surely impressive and easy to follow ….I hope to
    catch -up soon , as a marketing PRO/ I surely wish to
    learn alot from their new blog on marketing strategy.

  6. I am just stepping into the social networking features and
    google is surely impressive and easy to follow ….I hope to
    catch -up soon , as a marketing PRO/ I surely wish to
    learn alot from their new blog on marketing strategy.

  7. I like how you phrased the social media thing for business: “Adding social networking features to your corporate sites helps your users through the research phase of the buying process.” Companies get so caught up in the near-term transaction today mentality that they can miss the longterm concerns of building up interest and facilitating research for consumers that can drive future transactions. Hopefully as businesses continue to investigate online social networking, they’ll do it in a transparent and authentic way.

  8. I like how you phrased the social media thing for business: “Adding social networking features to your corporate sites helps your users through the research phase of the buying process.” Companies get so caught up in the near-term transaction today mentality that they can miss the longterm concerns of building up interest and facilitating research for consumers that can drive future transactions. Hopefully as businesses continue to investigate online social networking, they’ll do it in a transparent and authentic way.

  9. What is way more interesting than FriendConnect is what Google has done with Google Reader and you predicted it in 2006, Robert.

    You can now add friends to your friends list, share feed items, bookmark single blog posts from blogs that you read on the web and here’s the kicker, there is now a blog recommendation engine that recommends blogs you do not read by what your friends list is subscribed to in their Google Readers.

    Then, everything you share and bookmark in Google Reader of course comes up on your Google shared items page linked to by your Google profile.

    What really blew me away was the recommendation engine. If you add as many of your email list subscribers as you can to your Google Reader you can get a real good idea of what other blogs your subscribers are reading.

    The links in your shared items are all HTML and fully followed so every time one of your RSS subscribers shares a blog post it is creating incoming links to your site.

    Better yet, it uses the exact blog post title you wrote so now your links use your keyword phrases and bookmarkers can’t change your title tag.

    After talking to my SEO top dog contacts, they were all floored and assured me this is the new SEO tactic that no one knows about.

    http://www.keywebdata.com/?p=136

    It is kind of hard to add friends, the easiest way is to send a chat invite from Gmail and then email your contact you want to friend and have them email you back. It seems Google wants a two way conversation before they will allow you to become mutual friends.

    If you would like to friend me, add chrislang at gmail.com to your Google Gmail chat and send me an email letting me know so I can return an email to you, thereby creating a two way connection in Google.

    Google is quietly rolling this out behind the scenes but it is a full blown social bookmarking application and the blog recommendation engine is the new blog marketing strategy.

    One thing I have not quite figured out is if using FeedBurner now hurts you since the links point at the FeedBurner redirect rather than your site like a WordPress feed does.

  10. What is way more interesting than FriendConnect is what Google has done with Google Reader and you predicted it in 2006, Robert.

    You can now add friends to your friends list, share feed items, bookmark single blog posts from blogs that you read on the web and here’s the kicker, there is now a blog recommendation engine that recommends blogs you do not read by what your friends list is subscribed to in their Google Readers.

    Then, everything you share and bookmark in Google Reader of course comes up on your Google shared items page linked to by your Google profile.

    What really blew me away was the recommendation engine. If you add as many of your email list subscribers as you can to your Google Reader you can get a real good idea of what other blogs your subscribers are reading.

    The links in your shared items are all HTML and fully followed so every time one of your RSS subscribers shares a blog post it is creating incoming links to your site.

    Better yet, it uses the exact blog post title you wrote so now your links use your keyword phrases and bookmarkers can’t change your title tag.

    After talking to my SEO top dog contacts, they were all floored and assured me this is the new SEO tactic that no one knows about.

    http://www.keywebdata.com/?p=136

    It is kind of hard to add friends, the easiest way is to send a chat invite from Gmail and then email your contact you want to friend and have them email you back. It seems Google wants a two way conversation before they will allow you to become mutual friends.

    If you would like to friend me, add chrislang at gmail.com to your Google Gmail chat and send me an email letting me know so I can return an email to you, thereby creating a two way connection in Google.

    Google is quietly rolling this out behind the scenes but it is a full blown social bookmarking application and the blog recommendation engine is the new blog marketing strategy.

    One thing I have not quite figured out is if using FeedBurner now hurts you since the links point at the FeedBurner redirect rather than your site like a WordPress feed does.

  11. The problem here is that social communities are going to have trouble dispersing recommendations, where Gary, as a singular expert on wine, does not.

    How do you get people to recommend what they’re buying? There are two models: either they respond to a request, or they publish their buying preferences for their friend network to peruse. The former option is no better than asking friends directly — we don’t need social networks for this. The latter option is more interesting, but again, how do you get people to do it? Why would anyone want to publish their purchases to a social network? And if you make this opt-out you’ll have a massive privacy flare-up (as happened with Beacon).

  12. The problem here is that social communities are going to have trouble dispersing recommendations, where Gary, as a singular expert on wine, does not.

    How do you get people to recommend what they’re buying? There are two models: either they respond to a request, or they publish their buying preferences for their friend network to peruse. The former option is no better than asking friends directly — we don’t need social networks for this. The latter option is more interesting, but again, how do you get people to do it? Why would anyone want to publish their purchases to a social network? And if you make this opt-out you’ll have a massive privacy flare-up (as happened with Beacon).

  13. Recommending products, brands, services, etc. are things we talk about in everyday conversation. when we find a product or brand we love, we shout it to our friends, write on their walls, send them messages and emails, and so on. There just hasn’t been a structured way though, to see what your friends are buying and recommending. It’ll be really useful when we’ll be able to see what our friends are buying and recommending, without having to directly ask them every time.

  14. Recommending products, brands, services, etc. are things we talk about in everyday conversation. when we find a product or brand we love, we shout it to our friends, write on their walls, send them messages and emails, and so on. There just hasn’t been a structured way though, to see what your friends are buying and recommending. It’ll be really useful when we’ll be able to see what our friends are buying and recommending, without having to directly ask them every time.

  15. I like reading your stuff. Thanks-
    I think also building trust outside of big companies to make purchases is key.
    Itunes, Wallmart- people trust and buy- but the little sites- it’s not so easy-
    Something to ensure purchasing trust with CC cards will define who can step up with discrectionary income- did I spell that right-

    it’s a big deal. Trusting, signing up and taking part in social sites outside of the big 5-

  16. I like reading your stuff. Thanks-
    I think also building trust outside of big companies to make purchases is key.
    Itunes, Wallmart- people trust and buy- but the little sites- it’s not so easy-
    Something to ensure purchasing trust with CC cards will define who can step up with discrectionary income- did I spell that right-

    it’s a big deal. Trusting, signing up and taking part in social sites outside of the big 5-

  17. Robert Hi,

    When trying to analyze how companies can benefit form Facebook Connect, I would differentiate between different sorts of companies:
    1. Companies that sale products online
    2. Companies that sale single/multiple brands only off-line
    3. Companies that sale specific service off-line

    What are the opportunities and risks in case?

  18. Robert Hi,

    When trying to analyze how companies can benefit form Facebook Connect, I would differentiate between different sorts of companies:
    1. Companies that sale products online
    2. Companies that sale single/multiple brands only off-line
    3. Companies that sale specific service off-line

    What are the opportunities and risks in case?

  19. Excellent, Robert. Thanks. My brothers both run sites from Australia (martial arts and motion graphics…go figure!!) and are intrigued with Gary’s model. It’s always useful to check out the metrics and business case.

  20. Excellent, Robert. Thanks. My brothers both run sites from Australia (martial arts and motion graphics…go figure!!) and are intrigued with Gary’s model. It’s always useful to check out the metrics and business case.

  21. Robin: I’ll ask Gary if he can share his sales figures and the effect his site has had (he’s been on a ton of national TV lately like Jim Cramer’s Mad Money). He told me several people have driven thousands of miles to get to his store and take pictures inside of it because of his show (60,000 watch each episode).

  22. Robin: I’ll ask Gary if he can share his sales figures and the effect his site has had (he’s been on a ton of national TV lately like Jim Cramer’s Mad Money). He told me several people have driven thousands of miles to get to his store and take pictures inside of it because of his show (60,000 watch each episode).

  23. Thanks Robert. So now that the reach has expanded, how does Gary’s strategy relate to increased revenue? Book sales? Greater share of catchment in his local geography? Longer-term brand/credibility building? Building a platform of ‘traffic’ for on-line advertising?

  24. Thanks Robert. So now that the reach has expanded, how does Gary’s strategy relate to increased revenue? Book sales? Greater share of catchment in his local geography? Longer-term brand/credibility building? Building a platform of ‘traffic’ for on-line advertising?

  25. @Mary – You are going to get Gen X to contribute to 401k’s via influence through Facebook and Web TV shows?

  26. @Mary – You are going to get Gen X to contribute to 401k’s via influence through Facebook and Web TV shows?

  27. I’m about to email your post to my client in the 401 (k) business — I see this as highly relevant, especially to the new generation of workers. One thing that hasn’t totally hit us yet is that one of our new target audiences is those Gen-Y-ers that BNET and everyone are telling us it’s so hard to manage. Well, if we’re going to get them to contribute to their 401(k)s, this Facebook strategy is probably how it’s gonna happen.

    As for all the other products in the universe: Near as I can figure, kids who grow up on Facebook are staying on it past college and into young adulthood — that’s how they relate. As they grow up and have kids of their own, those kids may migrate to a different network, or they may regard their admission onto Facebook as a ninth-grader as a rite of passage.

    It’s only this generation of parents of the classes of, say, ’09 and older, whose FB lives are at all circumscribed. And we’re not going to dominate the marketplace in years to come.

    But whether Facebook or another, newer network for the children of the current FB generation, I do believe the social-media, peer-reviewed shopping paradigm is here to stay.

  28. I’m about to email your post to my client in the 401 (k) business — I see this as highly relevant, especially to the new generation of workers. One thing that hasn’t totally hit us yet is that one of our new target audiences is those Gen-Y-ers that BNET and everyone are telling us it’s so hard to manage. Well, if we’re going to get them to contribute to their 401(k)s, this Facebook strategy is probably how it’s gonna happen.

    As for all the other products in the universe: Near as I can figure, kids who grow up on Facebook are staying on it past college and into young adulthood — that’s how they relate. As they grow up and have kids of their own, those kids may migrate to a different network, or they may regard their admission onto Facebook as a ninth-grader as a rite of passage.

    It’s only this generation of parents of the classes of, say, ’09 and older, whose FB lives are at all circumscribed. And we’re not going to dominate the marketplace in years to come.

    But whether Facebook or another, newer network for the children of the current FB generation, I do believe the social-media, peer-reviewed shopping paradigm is here to stay.

  29. Gary’s in retail and an area where there is a million choices. Most product categories don’t have that many. Most just a few. Then there is the difference between manufacturers/retailers and B2B is a whole different ballgame. In most cases, most people can rely on close friends (face-to-face) with some online info and maybe a Identica Dent or Tweet.
    There’s always a success like Gary, how that translates into much else is not so clear or necessarily even possible.
    Personally I think Facebook and it’s kind will have a hard time with it.

  30. Gary’s in retail and an area where there is a million choices. Most product categories don’t have that many. Most just a few. Then there is the difference between manufacturers/retailers and B2B is a whole different ballgame. In most cases, most people can rely on close friends (face-to-face) with some online info and maybe a Identica Dent or Tweet.
    There’s always a success like Gary, how that translates into much else is not so clear or necessarily even possible.
    Personally I think Facebook and it’s kind will have a hard time with it.

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