Facebook Graph Search strengthens revenue streams, Yelp stock down 8%.

Facebook deals Yelp body blow with new search designed to enhance user experience. Photo: Gawker

WASHINGTON, January 15, 2013 — Facebook’s first major announcement since going public, Graph Search, has arrived. It is not web search but rather will focus on people, photos, places and interests. Users can type a question into the search bar on Facebook, ask questions and refine those questions. 

 While it is not meant to compete with Google search, it is designed to increase Facebook’s advertising revenue and strengthen their user experience. This feature will have a far greater impact on Yelp’s revenue and relevance - evident by Yelp’s stock dropping 8% today.

Being a public company now, Facebook has to be mindful of creating new revenue streams. Graph Search will create better targeted advertising opportunities for brands and promoters to leverage.

Microsoft’s Bing will not be handling this function, continuing to only handle Facebook’s web search. Facebook intends to roll out Graph Search slowly as they navigate concerns over user privacy. Plus, every time Facebook introduces a new function the Internet community has a Charlie Sheen-like meltdown. After their own failures, along with mistakes by partner Instagram and Netflix, they are learning. 

Following Facebook’s announcement, Eden Zoller, principal analyst at Ovum, shared the following thoughts:

“Before the arrival of Facebook’s Graph Search, the search function on Facebook was basic and as such, a wasted opportunity given Facebook’s imperative to strengthen advertising revenues. Facebook Graph Search will no doubt leverage member data to provide advertisers with more targeted, personalized advertising opportunities going forward. But Facebook needs to tread very carefully here and be mindful of user privacy. It claims to have built Graph Search with privacy in mind, but Facebook has a mixed track record on this front and is in the habit of pushing privacy to the limits of what is acceptable.”

“Facebook Graph Search is not a web search engine, but a search tool designed to enrich the Facebook platform and experience for both users and advertisers. This is sensible as a full blown web search engine from Facebook would inevitably have to compete with Google search, and given Google’s dominance of the search market it would be hard for Facebook to make a serious impact – and win advertising dollars.”

 


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Jeff Barrett

Jeff Barrett is an experienced columnist and business leader. He has been named Business Insider’s #1 Ad Executive on Twitter, a Forbes Top 50 Influencer In Social Media and has previously written for Mashable and The Detroit Free Press. 

 

 

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