Monetizing Facebook Graph Search

Experts have long believed that Internet Search, Social Networking and E-commerce would be the 3 main drivers of business for technology giants like Google, Facebook, Amazon and Yahoo. And manoeuvres in these 3 strategic areas shall define the success of these companies both in the minds of internet users and on stock exchanges.

Google took the lead in this direction by combining social networking with it's hugely successful search business more than a year ago by introducing Google+.

And recently Facebook played catch up with their new Graph search tool. For Facebook it was a move in the opposite direction, where they have attempted to integrate Search into their hugely successful social networking platform.

This new Graph Search feature has been currently launched for select users. And in essence allows users to trawl their network of friends to find everything from books to restaurant recommendations and is the company's biggest foray into online search till date.

The Graph Search feature offers internet users an entirely new dimension of information, which is currently not provided by Google. It allows people to search products or services which are recommended by their friends on Facebook.

For example, if you happen to be in Delhi and want to try a local restaurant, all you have to do is ask Facebook, for restaurant recommendations in Delhi that my friends like. With the possibility of restricting the search to Delhi based friends.

For investors, the real question though is can this be monetized. And if yes, then how successfully?

Analysts say Graph search contains some category suggestions that can be easily monetized. Facebook's existing partnership with Microsoft and it's Bing search engine might provide a way forward they say. Although, the investors drove the stock down almost 3 percent just days after the launch of the much hyped feature.

According to Google, half of all searches on mobile devices seek local information.Thus, the success of the Graph search feature will be determined by it's possible launch on mobile devices in conjunction with a mobile product by Facebook.

Also, although Zuckerberg has repeatedly stated that the quality of user experience comes first. Yet, he has admitted that graph search could potentially be a business over time. Since, the key difference between potential sponsored ads on Graph Search and the normal advertising on Facebook is purchase intent.

Till now Facebook advertisers were limited to using demographic targeting of users and their interests such as Liking a Sports, brand, or cuisine. But Liking does not convert into immediate purchases. Sponsored Stories and sidebar ads only bring about demand generation, hoping that eventually people would buy something. The ROI on these ads is always tough to measure, since the purchase cannot be directly attributed to Facebook.

But the Graph Search advertising has the potential to be radically different. It could let advertisers realize immediate ROI, by targeting people who are ready to buy something. You click through a demand fulfilment ad and make a purchase the same way it works for Google. According to Google, half of all searches on mobile devices seek local information. Thus, the success of the Graph search feature will eventually be determined by it's possible launch on mobile devices in conjunction with a mobile product by Facebook. But the possibility of sponsored discovery as part of the Graph search feature in the near future would be interesting and something to watch out for.

AIDA Model

< Attention -> Intetest -> Desire -> Action >

The Graph search model comes into play where the users already have a desire and are willing to take the next step of Action by searching for fulfillment.

5 Stages of a Customer Purchase Cycle

<1. Problem recognition -> 2. Information Search -> 3.Alternative evaluation -> 4. Purchase Decision -> 5. Post Purchase Behavior>

The Graph search can come into multiple stages of the customer purchase cycle by straddling presence in the Step 2 (Information search), Step 3 (Alternative evaluation) as users could potentially look at different solutions recommended by friends. Also, Zukerberg has repeatedly said that the Graph search is meant to provide customers with solutions not links. And finally in the post purchase behavior – by allowing users to read reviews of people who have used the product(s). This ability to read reviews of people you can trust, will lend credibility to the efficacy of the solutions provided.

Also, brands can think of using Graph search as a tool for consumer research or as a part of their CRM activities. The number and kind of reviews offered by clients could potentially help brands understand, where they stand vis a vis competition. And also accordingly calibrate their paid ads and Sponsored discovery spends in future.