Liz Gannes posted that Perez Hilton is now seeing more traffic coming in via Facebook than Google.
My colleague Udo Szabo at Nokia HQ in Finland has a theory that I call the Unified Theory of Interweb Economics. The theory goes something like this:
- Advertising is a function of your traffic volume, the more traffic that comes to your site, the higher rates you can charge.
- Social sites such as Facebook and Twitter have a lot of link sharing going on as friends post links to share them with each other.
- When Facebook and Twitter send more traffic than Google search referrals, advertising dollars will follow the source of that traffic.
- Google’s dominance in online advertising will be threatened.
One would think we’re seeing the first hints of that with perezhilton.com and it will take a long time before we see this trend across the board. But in hindsight this is obvious and looking at my stats for the past month I find that 44% of my visitors are coming from search engines and 45% from referring sites with a vast majority coming from StumbleUpon, a social site for sharing links.
The more you think about it, the shift in balance of power has already taken place. SEO is still a big industry but now there are companies that will help you with SMO (“social media optimization”). On twitter we’re starting to see scam artists try and insert themselves into the conversation just as they used to do with Splogs.
And so the wheel turns round once again and there appears to be a new king of the hill – AOL Keyword > Yahoo Category Link > Google Keyword Ranking > Social Site referral.
The jury’s still out as to which social site will send you more links but it’s looking more and more like Facebook. We used to have the Digg effect but no one talks about that anymore. Twitter certainly has the ability to send you a bunch of traffic in short order but the audience is still mostly the early-adopter set and any traffic will most likely be short-lived as the re-tweets scroll into the past.
Facebook, with 175 million users, certainly has the right broad-based distribution to broadcast a link and send back traffic. They have added new features such as FriendFeed’s “like” feature to make quick sharing easy. The Facebook Connect and Comments widgets also will help insert new links into Facebook for redistribution.
But while it’s great to get an influx of new visitors via a social site, it’s no good if it’s not a lasting reference. Has the pendulum swung to far the other way? There are some searches that work great on the real-time web, the latest viral video comes to mind, but others such as the listing for your local plumber just don’t work on something like twitter. Not that it’s worth anything but I still get a regular influx of traffic because I’m the #2 listing for insulting british slang even though the post is over three years old.
I think it’s fair to say that the social sites such as Facebook and Twitter will erode Google’s monopoly on online advertising. Google’s never been really good at building social sites and have shared in the growth of social networking in the past by providing the advertising engine for the most popular social sites. What happens with these sites start to go direct to the advertisers? Will Facebook advertising revenues come from traditional cost-per-click/auction model or is some other type of model required to succeed in a social networking site?