By 7 years ago in Google Social Media

Why Google should buy Digg and Facebook

Google pocketed $3.8 billion in advertising revenue during Q2 2007, an increase of 58% over the same period in 2006.

If Google is to keep growing at this rate in the future two things need to happen. The first is a question of reach – at present over 300,000 advertisers use the Google pay-per-click advertising model so if Google can reach out to the millions of other websites in existence they can grow the market and increase revenues.

Google

However increasing the size of an already multi billion dollar market is much harder than making the existing market more efficient. If Google was able to get even a small percentage increase in the click through rate of its Adsense adverts it would translate to millions of dollars in additional revenue.

At present Google uses a complex algorithm to determine not only which adverts to show but how much the advertiser needs to pay when you click on it. Factors such as the advert text and website content in relation to the search query are the main variables but there can be no doubt Google incorporates your previous search history into the equation.

Imagine a user who uses Google to perform navigational searches, they visit Google.com and type in Amazon a few times per week and have a tendency to click on links to Amazon.com in the Google search results more than any other site. Google tracks this behaviour and knows that if it shows a sponsored listing from Amazon at the top of the results the user is extremely likely to click on it. Hide the Amazon sponsored listing away at the bottom and the user might decide to visit an organic listing instead.

This kind of behavioural targeting is what could make a few percentage points difference and millions in extra profits for Google

Whats this got to do with Digg and Facebook?

Digg, Reddit, StumbleUpon, Facebook and pretty much every other social network have a huge amount of data about their users. For years I’ve been telling Digg exactly what I like, what I hate and what I read.

StumbleUpon knows the websites I visit every day thanks to their toolbar and seems to be better than anything else at finding cool stuff for me to look at.

Imagine if Google had access to this data. For every search they would know that I don’t use eBay but that its a good idea to show me some sponsored listings for Amazon. They could tell that since you always Digg Linux articles you might not be interested in buying the latest copy of Microsoft Office when you search for “software”.

With data from sites such as Facebook, Digg, StumbleUpon and even Myspace Google would have a huge arsenal of information to apply behavioural targeting to its users.

Even a 1 percent increase in revenue would be more than eBay paid for StumbleUpon.

By Patrick Altoft. at 10:52AM on Tuesday, 16 Oct 2007

Patrick is the Director of Strategy at Branded3 and has spent the last 11 years working on the SEO strategies of some of the UK's largest brands. Patrick’s SEO knowledge and experience is highly regarded by many, and he’s regularly invited to speak at the world’s biggest search conferences and events. Follow Patrick Altoft on Twitter.

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5 Responses to “Why Google should buy Digg and Facebook”

  1. Simon Ward says:

    Just think of legal issues of what you are talking about. The Privacy act states that data may not be used purposes other than what it is collected for, so all existing data couldn’t be used for anything. What they could do is buy the companies change the TOS to say something evil like….”we can do anything with your details”, then start collecting…it wouldn’t take long to build up a history. Google is already collecting, and profiling us using our Gmail accounts… I guess there is room to expand the evil empire.

  2. Tibi Puiu says:

    Well google as well knows every move you make on the web, thanks to their toolbar ;).

  3. Jad says:

    But do you think people will keep using these services if it become Google’s ?

    What kept many people loyal to Flickr and Orkut that they didn’t change the brand nor the TOS of service by Yahoo! and Google.

    as for Facebook and myspace, I’d say they wont do such move, such sites are like bubble and nobody knows when such site would die like hi5 and old style social networks but I still believe they are going to last for long time.

  4. Vikram says:

    Very intelligent observations. You have given me inspiration to think laterally while writing a post!

    Good One! Smile

  5. Chris Lang says:

    Google is not going to buy Facebook when they are backed by Microsoft. Do you not see the hand of Steve Ballmer in Facebook Connect? This is war between Google and Microsoft. If Facebook had not backed out of Google Friend Connect, Google would have owned the internet. They still do but that is another point.

    No one is going to buy Digg because it is not for sale. Digg is now worthless after the latest round of investment. Kevin Rose, even if he could sell Digg would not get a cent. The investors own the place. Kevin and Jay’s only chance is to hang on to Digg and turn a profit and they plan to do that thru Facebook.

    How now with Facebook? Facebook Connect is going to hook up our Facebook profiles with a Digg profile. 100 million Facebook users can’t be wrong, or so they think at Digg.

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