Valuing a Social Signal vs. a Search Signal

Intent vs. Social: There’s a question hanging over social media: Will personal relationships ever be as powerful as intent, at least when it comes to its role as an advertising signal? Judging by the valuations assigned to companies like Facebook, the answer is clearly yes. But Facebook has such a massive audience that it could make money off this in any number of ways. Search is unique. It is, in the words of ex-Yahoo CEO Terry Semel, “a beautiful system.” Google was able to return to us exactly what we’re looking for. The advertising problem, while not trivial, is pretty straightfoward. Intent-based ad signals have proven very valuable. Network connections are trickier. Jonathan Mendez, CEO of Yieldbot, reacted with a terse “bullshit” to the notion put forth by Buddy Media on the heels of its funding valuing it at $500 million that we’re moving from an intent-based world to a people-based world. Mendez points out that Google grew its revenue more in comparison to a year ago than Facebook is forecast to bring in this entire year. It’s clearly early, so that should change. Few expect the people-based world to replace search. But it should take away the prominence of its role as an information gatekeeper. Whether it’s monetized as effectively, that’s another story.