Has Facebook Found the Key to Making Money via Search?

While it’s anyone’s guess what will be rolled out at the f8 Facebook Developers Conference on July 23, odds are it will probably be something big. Last year, Facebook used this forum to launch their wildly successful application platform.

Even though the applications have been a big success for users and developers, it hasn’t put much money in Facebook’s pockets. The companies, agencies, and developers using the platform are making all the money.

The speculation and buzz is an announcement of e-commerce and micro-payment capabilities. If it’s not made at the conference, then it will surely be soon. The social networks (Facebook, MySpace, etc.) have been struggling to generate revenue and profits, so this would provide a needed boost.

“This is a journey that is going to unfold over the next five to 10 years. That’s when the winners will emerge,” Chamath Palihapitiya, Facebook’s vice president for product marketing, told the New York Times.

Introducing these types of social commerce capabilities is huge. Here are just a few reasons why:

Small Business

Many small businesses have a hard time selling on the Web. It’s difficult and costly. For example, a Yahoo Merchant plan costs $40 per month plus another $35 to $40 to process credit cards. On top of that, you need to pay the transaction fees (between 1 and 3 percent) to the credit card companies, and you also have to pay a Web developer to set up and maintain the site. This is a daunting barrier.

However, if Facebook makes it easy for small businesses to easily and cheaply post a company page and begin taking credit card transactions, this is very powerful indeed.

Complementary to this is speculation that Facebook will advance the ability for micropayments. This improves the viability of transactions under 20 cents. For example, Barack Obama’s fan page has more than 1.1 million fans. If each one donated just 15 cents, he would quickly generate $167,000. Or, instead of just giving someone a Facebook “gift icon,” you could give actual cash along with the “gift icon.” This potentially introduces the concept of “micro-branding” as well.

Facebook micro-branding

eBay/Craigslist Hybrid

Craigslist has been widely successful because it’s much easier to use than eBay. You can post an item in less than a minute. However, its two major shortfalls are the security and regional limitations. Facebook has already rolled out Facebook Marketplace and the guess is they’ll launch more support items around it, like a PayPal type system that allows “Facebookers” the ability to easily transfer currency.

This makes sense, since people are more comfortable swapping and buying items with someone they know rather than someone in Turkistan.

It also makes sense for other user items. For example, after a big weekend in Vegas one can simple ping everyone in Facebook with the amount each one owes for the hotel room. This removes the “lost check” syndrome or didn’t receive your e-mail; obviously this is bad news for the proverbial freeloader.

What does this have to do with search?

Well, once there’s scale to the commercial transactions taking place on Facebook, then people will start searching for things rather than just people. Once this happens, there’s a lot of money to be made around search; just ask Google.

What Should Companies be Doing Now?

Small businesses should welcome this with open arms.

If you’re a large enterprise and already have a “group page” on Facebook, you should migrate to a “fan page” as quickly as possible. Apple and Southwest Airlines are already doing this.

Facebook Fan Pages

A fan page gives you much more flexibility (e.g., you can embed applications) and is better supported. Facebook also recently made this transition easier by automatically transferring members of the group over to the fan page. Historically, Facebook hasn’t been too helpful with the transition process.

Once you have this fan page in place then you should utilize the same SEO principles that you do for your own site. The eventual Facebook spiders are going to crawl the Facebook network in a way that’s similar to how the search engines crawl company sites today. The results will most likely be positioned differently to showcase what your network found helpful; leveraging the power of social search.

Facebook will probably offer more PPC advertising opportunities around the searches.

The good news? If you missed the boat for the last few years, it appears that a new ship is about to set sail. All aboard!?

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