Look out, Google?

Daniel Frankel of PaidContent.org recently noted that, during Q4 of 2011, Facebook’s share of the overall online advertising market was 2.7 percent, and, during 2012, its share might rise to 5 percent.  “Look out, Google,” Mr. Frankel warns.

But does Google really need to look out for Facebook?  Does the rise of social advertising imply the impending decline of paid search advertising? Is it all a zero sum game across different online advertising channels?

To each of these questions, we think the answer is “No.”

Facebook is, indeed, an online advertising juggernaut — it has had terrific user and revenue growth. It’s an extremely sticky application.  And, of course, Facebook knows a lot more about its users than the average web site. Facebook will undoubtedly have a massive IPO in May, and social advertising both on and off Facebook will continue to grow.

Whether or not the rise in Facebook advertising revenue will come at the cost of at Google’s Adwords revenue comes down to one word:  intent.

What’s the typical intent of the average Facebook user? It’s a one-to-many way to stay in touch with friends and family — to see and/or post photos and status updates. For many, it’s also a way to play games like Farmville and Mafia Wars. Or, as Betty White said while hosting Saturday Night Live, “…It sounds like a huge waste of time.”

Staying in touch with friends and family and playing games certainly generates a massive number of page views.  Indeed, those page views represent a massive advertising opportunity.

The value of any online impression, however, is driven by the consumer intent (or lack thereof)associated with that impression. As such, the value of a Facebook impression will never be in the same ballpark as the value of a Google impression — when the consumer is actively searching for something.

Facebook is primarily an opportunity to improve awareness and build brand across a large audience base, and to increase engagement among customers. It’s not (yet) an opportunity to meet consumers who are actively searching and are in-market for a product, service, or information.

The vast majority of Facebook impressions will continue to have a fundamentally different intent than Google impressions.  As such, marketers should grow their social/Facebook advertising in conjunction with growing their paid search advertising, but not as a replacement for paid search advertising.