Google+ has become the world’s second-largest social network, followed by YouTube, a study has found. That might strike some observers as a bit odd. Some might not consider YouTube a social network at all, and Google+ a relatively modestly successful social network.
Most people probably have an idea about what they think a social network entails, which is why so many people have argued Google+ would fail to compete with the likes of Facebook.
But what if the objective is not to build a Facebook style social network, but something else? And that might be what Google is doing with Google+. There has been an important shift in business models for popular, widely-used applications lately.
Until recently, the business model for most applications was “advertising,” using a “media” revenue model: amass a critical mass of potential buyers of a product; then sell advertising.
With the huge adoption of smartphones, something else has started to make sense. Though it is not the only enabler, smartphones are important drivers of new revenue or monetization models.
Smartphones are the one device that always is with a person and is considered by most to be the most personal of all personal devices, and smartphones include location information. In other words, smartphones are sensors, in a sense.
More so than for other devices, smartphones are used when people are out and about, and “about to do something,” whether that is go to a place, grab some coffee or buy some other product that is needed “right now.”
That means the revenue model could include advertising, but more importantly can encompass “steering a user to a particular brand, when a purchase is about to happen.” That is why there is so much attention being paid to mobile payments, mobile wallets and mobile commerce.
It isn’t just that a revenue stream can be created. It is that a second great revenue model is possible, in addition to advertising.
You might say that is why mobile search is different from desktop search. Desktop search is less intimately related to “commerce.” When people “search” on a mobile, there is a much greater likelihood they are looking for information with a distinctly commercial character.
The growing importance of “commerce” is behind Google+, which actually might be seen as an identity mechanism that unifies all Google application usage to allow Google to take advantage of the contextual information that Facebook calls “Graph Search.”
Note the use of the term “search.” Search is about people finding things. But what they are looking for changes, to an extent, with smartphones. More of what people are searching for is things to do, places to go and things to buy.
Commerce, in other words, is the huge new revenue model. If there is truth to the notion that advertising is the effort to convince a person to buy something, commerce revenue models now are about the actual process of helping a user to buy a specific brand, a specific product, at a specific location, right now. You might use the word “steering.” That is close to the notion.
The point is that Google+ might have huge value, but not as a traditional social network. It might be an important building block for Google as it moves toward a second great revenue stream: retail, essentially. And the firm most significant in that regard is Amazon, in the sense that Amazon’s revenue model is probably the direction Facebook and Google are heading.
Amazon gets a piece of a transaction, by the sale of an item. To a greater extent than we might have realized, that is where Facebook and Google are going. And that means Google+ has value in ways not so obvious as we might have thought.
Edited by Brooke Neuman