Profit from Google's Growing Social Media Presence Now

By Maxwell Fisher - August 8, 2012 | Tickers: AAPL, FB, GOOG, MSFT, ORCL | 0 Comments

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Google (NASDAQ: GOOG) seems to have interests in everything tech these days. In addition to reigning supreme as a search engine, the company has met with much success in the mobile phone market with its Android OS. Now, the company has positioned itself as a big player in the world of social media, dominated by companies like Facebook (NASDAQ: FB) and Twitter. With the recent one-year anniversary of Google+, the company has taken steps to increase its presence in social media in a variety of ways.

Social Media Ad Space

In an effort to provide additional ad space for retailers and other businesses via social networking sites, Google recently acquired Wildfire, a startup that specializes in helping businesses manage these types of ads. Even though businesses can purchase and manage ad space directly through social media sites like Facebook, Google plans to put together a one-stop-shop package that allows businesses to manage Google ads on its search engine as well as ads featured on social media sites (including Google+) from one convenient place.

Facebook has faced some potentially serious setbacks over the past few months, including user backlash and lackluster quarterly earnings. If those in the business community want to find an easier way to manage social media advertising, Google may be on to something by providing an interface that's fast, easy and convenient to use. The impact social media ads have on consumers continues to fall under intense scrutiny, however, as both businesses and consumers learn how to effectively use them to promote and learn about goods and services.

It's a safe bet that advertising on social media sites will pay off in the long run for most businesses, though. Getting in early by providing an easy way to manage these ads could help Google maintain and grow its social media platforms.

Google+ on the Rise

According to a new survey by comScore, Google+ has gained in popularity over the past year. This is great news considering the social media site is still in its infancy. Google+ received 15.2 million visitors in November 2011 and 27.7 million visitors in June 2012. If these numbers remain consistent or continue to rise, Facebook may start to see a fast and steady migration from its site to Google+.

Considering this, coupled with a decline in customer satisfaction with Facebook, Google+ could take over someday to become the social media site. According to The American Customer Satisfaction Index, customer satisfaction of Facebook dropped 8% from last year. While this does not signal that people are completely abandoning Facebook for other social media sites, it does signal a shift in user attitudes.

Google Provides More Freedom for Bloggers

Another part of Google's strategy to increase its relevancy in social media may be the integration of its services. Google now allows those using Blogger, the company's blog platform, to link blogging and Google+ profiles even if account holders use two different names.

For example, a business owner may have a Google+ profile under the business name and a Blogger account under their own name. Now people can link information from both accounts and attribute both to the same author. In the past, Google didn't allow people to link accounts that had different user names.

This might not seem like a big deal, but for those that manage multiple accounts on Google+, Blogger and other social media websites, this will reduce the amount of time spent switching from account to account and adding additional links to websites. This will make maintaining online marketing campaigns more efficient.

Google Can Afford it, but is the Competition too Close for Comfort?

With a net operating income of $4.44 billion and free cash flow of $3.67 billion, as reported on its Q2 2012 cash flow statement, Google has more than enough to cover any expansion into social media and other markets. This should make investors very happy. And since Google has a diverse portfolio and a well established brand, even if its social media endeavors turn sour, the company will have plenty to recoup from any losses.

But when it comes to the competition, in addition to Facebook and business networking website LinkedIn (LNKD), Google faces other successful companies like Apple, Oracle (NASDAQ: ORCL), and Microsoft (NASDAQ: MSFT) in its continuing battle for internet supremacy. Microsoft recently acquired Yammer, a social media tool for businesses, which it will add to its updated Office Suite set for release by the end of 2012. Oracle has picked up a few social media startups, including Involver, over the past few months in an attempt to make a name for itself in the world of social media.

It will be an interesting few months as investors, company executives and others prepare for the next wave in social media marketing and communication. While it seems that most companies expect investments in social media will pay off, it's still a risk. After all, consumers remain fickle and unpredictable when it comes to the selling of goods and services online. Since the main objective of these companies is to provide increased space to businesses for advertising purposes, if social media proves a mediocre platform for advertising, these companies will lose a ton of revenue while they scramble to find new ways to profit from the internet.

The Big Picture

With enough to keep the company busy, Google should look pretty attractive to investors right now. Increasing its social media presence is just one of many projects the company will oversee through 2012 and beyond. Investors should remain pleased with ongoing profits and in how Google prepares to step into the forefront of social media. Through wise acquisitions that make existing platforms more user-friendly, the company definitely has a sound strategy going forward.

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