When Mark Zuckerberg was reviewing Facebook's (NASDAQ:FB) three-, five-, and 10-year goals with analysts on the company's latest earnings call, he mentioned that Search is one of the next round of products -- including Instagram, Messenger, and WhatsApp -- he wants to grow to 1 billion users. This week, the company took a step toward that goal by improving Graph Search, and extending it to the iOS app.
If there's one area where Twitter (NYSE:TWTR) performs better than Facebook, it's search. Meanwhile, Google (NASDAQ:GOOG) (NASDAQ:GOOGL) is competing to keep mobile users searching in their browsers as apps start to take up more of their time on smartphones and tablets. Facebook is, by far, the most popular of those apps. So should Facebook's Search goals have Google and Twitter worried?
Facebook introduced Graph Search in January 2013, and it hadn't touched it until this week. The feature allows users to search for pictures, places, and photos, and with this week's update, users can search posts, as well. So, if I want to know what my friends from St. Louis are saying about the situation in Ferguson, it's now much easier to find out.
"Your search results are personalized and unique to you and, as always, you can only see things that have been shared with you," Facebook said in announcing the updates. It also said the updates are "designed for mobile."
This differs from Twitter's search, which will pull every post containing a keyword, and organize them in reverse chronological order. This gives you a pulse of what's happening around the world right now, but it doesn't necessarily provide you the personalized results of Facebook. Google will use the information it has about you to cater search results to you, but the results aren't exactly personal.
Why mobile search is so important
Google built a $350 billion business on the idea that search keywords telegraph interests. Even while it's struggled to monetize mobile, as well as desktop search, the company completely dominates the mobile ad market, taking more than 37% of the market this year. If you remove Search advertising from the equation, however, that market share falls to less than 12%.
In 2014, mobile search advertising spending grew to approximately $9 billion. That number is expected to more than double during the next two years. That's why Google wants to defend its share of the mobile search market, while Facebook and Twitter want in.
At Twitter's analyst day, CFO Anthony Noto mentioned search is one of the keys to unlocking value from its logged-out visitors. Seventy-five million logged-out visitors come to Twitter every month to search for things, and Twitter has yet to monetize them. Twitter can combine keywords with other data, like where users navigated from to get to Twitter, visitors' locations, and the time of day to sell advertising on search results pages.
While Facebook doesn't yet serve ads in its Graph Search results, it would make sense for the company to offer advertisers the opportunity to place ads against specific keywords. It might be awhile before it gets there, however, because Zuckerberg noted on the latest conference call that he doesn't really think of things as businesses until they get to about 1 billion users.
Thinking long term
As mentioned, the mobile search ad market is expected to double during the next two years, and that strong growth should continue for years to come. Graph Search is still in its early stages, but it's exciting to see Facebook start to deliver on the promises it made nearly two years ago.
Right now, the product isn't designed to supplant Google or Twitter for information or real-time opinions, but it has a lot of potential to organize all of the information that people post on Facebook. Not only could Facebook take a chunk of the soon-to-be $20 billion market, Graph Search could also lead to additional engagement on the platform leading to additional display ad revenue.