How’s about this for putting a line in the sand? “Facebook will be more valuable than Google in three years.”
That’s a prediction from David Jones, the former global CEO of the huge advertising agency network Havas. Since leaving that business last year he has gone on to start his own “brand technology group,” You & Mr Jones, which has raised $US350 million in funding and has already made investments in tech businesses including viral news site Mashable, crowd-sourcing company Mofilm, and content marketing platform Pixlee.
Jones has always been bullish about Facebook. Just days ahead of Facebook’s IPO in 2012, when General Motors pulled all its paid-for ads from Facebook (worth $US10 million) after saying ads on the platform didn’t work, Jones defended the social network on Bloomberg TV saying GM’s decision would not have an effect on the social network’s success and that within a couple of years it would be back advertising on the platform (it was). He also added that people would look back in years’ time and laugh that anyone thought Facebook’s $US100 billion valuation at the time was over-inflated.
But three years later, Facebook still has a long way to go before it is more valuable than Google. Currently Google has a market cap of around $US362 billion, while Facebook has a market cap of $US241 billion.
Speaking to Business Insider in London, Jones said there’s a simple reason he’s “convinced” Facebook will be more valuable than Google in three years: Google’s core business (selling ads on search) is still “built on intent signals.” Facebook’s core business is built on “identity signals.”
Intent is the idea that if you’re searching for something, Google can make reasonable assumptions that you are probably interested in that product or that piece of content and then make guesses on whether you’re male or female, your location, interests, and so on.
But with identity signals, Facebook knows who you are, because you told it when you registered, and you feed it with more information every time you like a page (it then aggregates and anonymizes this information, so advertisers don’t know that specifically “Lara O’Reilly from London” clicked on this ad, but it does know that a group of females, aged between 18-35, in London, for example, showed an interest.) Google uses some identity signals too — it has a huge log-in base of Gmail and YouTube users, for example — but it mostly relies on intent.
“I think identity allows you to do 100 things, including intent, and you can see it already with what [Facebook has done.] Everything they do and the way they’re building their business is so clever. The speed of reaction. The way they scale. The decisions they make. If you watched the F8 developers’ conference, and the way they started talking about Messenger changing retail: The ability for you to be chatting about a dress with someone [at a retailer] and for them to go ‘OK, we’ll send it to you.’ Done. I think stuff like that is incredible,” Jones explained.
Google is shifting more towards identity signals. Last month, for instance, it announced it was bringing cross-device measurement to its DoubleClick for Advertisers platform, so advertisers can begin to get an idea of whether someone who saw an ad on their mobile went on to buy that product on their desktop computer (which beforehand was hard to track from device to device because mobiles don’t drop cookies.) However, while it does use data from the millions of users signed into Google, an algorithm basically weights the data (to include all the logged-out users across its network) to make intelligent guesses and it uses modelling techniques to determine whether a user on one device is the same user that went on to use a different device.
Jones stressed in his prediction that he wasn’t saying “Google is in trouble,” but just that three years from now, Facebook is likely to be the bigger company.
Jones thinks people underestimate Twitter too
However, Jones thinks much of this criticism is over-blown.
“At the moment, Twitter is getting a lot of flack because it’s gone public. I think if you said to somebody ‘There’s this really amazing tech company that grew 78% this year,’ [people would respond]: ‘Woah!’ Well that’s Twitter. Obviously there’s some stuff to sort out there. But even with the launch of my own business, we’ve found Twitter has been a great help and a great partner,” Jones said.
Twitter is currently on the hunt for a new CEO after Dick Costolo announced last month he was stepping away from the role. Sources told Business Insider earlier this week that Twitter’s revenue chief Adam Bain is currently the board’s favoured candidate for the role.
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