Facebook 2: The search engine is coming

It’s tough being Mark Zuckerberg. A few weeks ago, you had your competitors running scared and Microsoft desperately hung on to the front of the queue to do a deal with you that, by some estimates, values your company at $15-billion. Unfortunately, you face these nasty rumours that the clickthrough rate for Facebook display advertising campaigns are as low are 0,04%, compared to 0,2% for all display advertising and 5% for Google Adwords. What’s a 23-year-old internet mogul to do?

Copying the successful formula of another company would be admitting that they’ve hit the sweet spot, so your other option is to reinvent the advertising industry again. So you try your hand at creating a new kind of advertising using the demographic information that your users put in their Facebook profile and combine it with users’ online purchasing behaviour, but you fail to consider that maybe they don’t want you to use that information to set up a flea market on their news feed. Madison Avenue and a couple of big-bucks advertisers attend your swish New York launch of Social Ads and Beacon, and some attendees gush that you’ve created the new word-of-mouth marketing. So far, so good.

Pity about those pesky privacy advocates that leave their virtual communes, carpool in their Priuses and form picket lines at Moveon.org and proceed to make such a big fuss about your plans for world domination that your launch partners don’t launch their Social Ads/Beacon campaigns (Travelocity), and you suddenly have to make your game-changer an opt-in programme. Why would anyone want to opt in to this programme? Beacon is stillborn and Social Ads is placed in the respirator. Damn Moveon.org for having nothing to keep them occupied since Dubya was re-elected.

Now $15-billion-worth of investor and industry expectation is a big weight to carry on any shoulders alone, so I’m going to pitch in with my five cents’ worth for Mark and Facebook’s management team.

1. Get over the behaviorally targeted display advertising thing.
People who are using Facebook don’t care about that crap to the left of their profile; they are more interested in investigating at whom they should throw a sheep, what iLike tracks their friends are getting down to or any new YouTube videos on their Funwall. Add to this disinterest the fact that those Move-On mountain cabbage tokers have nothing better to do with their time at the moment and that display advertising leads to banner blindness, and you’re barking up the wrong tree here if you have designs on web domination.

2. Go where the money and the precedent is — search.
Forty percent of web advertising spend is in search within five years of its launch, because it has by far the best clickthrough and sales conversion rates. People actually want this kind of advertising. People search in Facebook all the time — they look for friends, interest groups, applications and more recently even special-purpose, commercially driven pages. You don’t even have to teach people how to search; more than 5% are leaving Facebook to search on Google already: you just have to broaden the scope of search inside Facebook by making search boxes ubiquitous and results relevant.

3. Leverage Microsoft’s technology.
You got Microsoft in as a partner to sell display advertising, so why not use its fairly decent Live Search index (which even includes Wikipedia results) for search results as well? You can monetise the Serp by including a combination of MS Live-sponsored ads, and Social Ads linking to Facebook pages before, to the right or left of, or below the natural search results.

4. Create a search-engine home page at Facebook.com
When a visitor gets to Facebook.com he should find a clean, white page with a Facebook logo, a search dialogue box and a few other icons that link to things such as “Login to/create profile”, “Browse applications” or “News feed” (similar to Google.com layout). Allow anyone to search from that page, even people who don’t have Facebook profiles. Some search results will be blocked by Facebook user privacy settings. Algorithms will have to establish whether a Facebook search is mostly about Facebook or not. Queries that are mostly about Facebook will push Facebook-specific results to the top of the Serp. While we’re at it, use the display advertising space to the left of a profile or even a few rows above the profile to display a mini Serp, after a search from within a profile page, so that people don’t have to leave Facebook to view results.

With a decent cash generator behind it, the opportunities available to Facebook are enviable. I think that ubiquitous Facebook search would make its $15-billion valuation look like chump change.