Editor’s note: This guest post was written by Seth Sternberg, the CEO and co-founder of Meebo.
Rewind to the year 2000. There was an explosion in internet innovation. The stock market was starting to get shaky. Lycos, Yahoo!, Infoseek and Excite had sewn up internet search.
Publishers were benefiting from search engines driving traffic to their sites. Instead of AOL’s, Prodigy’s and CompuServe’s closed web, search engines were a massive boon to the open, distributed web. They became massive sources of traffic to publishers and retailers, large and small.
And then came little Google. It was simple. It was fast. The results were better. The market was already baked, but Google managed to slip its way in.
By 2000, publishers began to integrate search into their sites. Initially, publishers worked with white label providers, or built their own. But quickly, the branded search engines realized that they would get more searches, more data, and consequently, more market share, if they were the search provider on publisher’s sites. And so began the war for publisher distribution. But publishers didn’t choose which search engine to embed on the basis of product alone. It was also about the money.
Savvy publishers pit Google against Yahoo! against Ask. The company with the best economic offer would win the right to provide search on the publisher’s site. Google’s economic model turned out to be better—and so they could pay publishers more. Over the next several years, during the recession when search revenue was key to a publisher or retailer’s ability to survive, Google leveraged their superior economic engine into dominant publisher-side distribution. This was likely one of the core assets that decided the search market. By 2004, when Google went public, the search market share war was effectively over. Google not only worked its way into the already baked market. It came to lead it by a healthy margin.
Publishers were one of the big winners in all of this. Not only did they benefit from the traffic search sent their way, but they were now earning hard cash. Enough, in fact, that search monetization came to be a very meaningful revenue source for the web. This all seemed like it could only be a once in a blue moon kind of deal—what else could possibly both drive traffic and hard cash at the distributed web?
Fast forward to 2011. We’re in the middle of an explosion in internet innovation. The stock market is shaky. Social is the big thing, and it’s done—Facebook and Twitter are the kings.
Sites are benefiting immensely from social—social networks are referring users’ friends to sites. Social now rivals search as a source of traffic.
And now comes Google(+), attempting to make its way into an already baked market.
Sound familiar?
Yes, you can point out the differences between the evolution of search in 2000 and social in 2011, but the similarities outweigh the differences. Just as sites were working fast and furiously to integrate search into their sites in 2000, in 2011 sites are doing the same with social. Social sharing buttons are everywhere. Facebook’s Social Plugins seem ubiquitous. And just as search was integrated for traffic in 2000, social is integrated to drive traffic in 2011.
You’re probably thinking that the social game is done—Facebook owns it, both at Facebook.com and through Facebook Plugins on publishers’ sites. But if you’re Google or Twitter, you’ve not forgotten how the search wars were fought.
So what comes next? If history’s any guide, the social networks will compete for site distribution through traffic referral and cold, hard cash.
The social service that drives the most traffic and revenue will get the most distribution. That service will then generate the most traffic, user data and revenue. The social wars are likely to move to the distributed web and publisher payments will become a key currency.
Just as Google combined its superior economic model with a simple, fast and better set of results to fight its way into search and gain share through publishers, it’s extraordinarily likely that we’ll see the same battle break out in distributed social. And once again, publishers will be the big winners as Facebook, Twitter and Google all vie to win the war.
It’s too early to call the winner here. Facebook has strong network effects and a healthy lead in distributed social in 2011. In 2000, in contrast, there was no clear leader in search.
That said, Facebook’s social monetization may not turn out to be as powerful as Google’s, which is investing heavily in display. Google also has the benefit of its search cash flow and could choose an uneconomic social model for a period of time. Twitter, meanwhile, is behind Facebook with respect to deeply integrated publisher tools, but will work to innovate quickly for publishers—just look at the recent Twitter Analytics launch at TechCrunch Disrupt. While their monetization capability is much smaller than Facebook’s or Google’s today, they get unbelievable organic demand from sites for an integrated Twitter experience—across print and on air programming too! And how about a gaming player bubbling up? Zynga’s per user economics are incredible. Should Zynga figure out how to integrate their social games across the distributed web, it has an economic model that might beat out the ad based models of either Google or Facebook for real estate on millions of sites.
There’s no telling how the social wars will play out, but they’re coming.
If you’re a brand, retailer or content publisher, rejoice. You’re likely looking at the next once-in-a-decade opportunity to grow your traffic and revenue all in one go. That can only spur more innovation, which will make the web a better place for us all.