Facebook Inc's new search tool has strong potential to generate revenue
for the social networking company, though it is unlikely to challenge
Google Inc as the world's dominant search engine, Wall Street analysts
said on Wednesday.
Facebook's "graph search" tool, rolled out on
Tuesday, lets its more than 1 billion users trawl their network of
friends to find everything from restaurants to movie recommendations and
is the company's biggest foray into online search.
Graph search contains some category suggestions that can be easily monetized, BofA Merrill Lynch analysts said in a note.
"It should be easy to incorporate commercial search results via Facebook's partnership with Bing," they added.
currently has a partnership with Microsoft Corp, whose Bing search
engine provides search results for external websites. Microsoft also
integrates certain Facebook results into its Bing search results.
Merrill Lynch analysts estimated Facebook could add $500 million in
annual revenue if it can generate just one paid click per user per year,
and raised its price target on the stock by $4 to $35.
shares were flat at $30.10 in early trading on Wednesday. They have
jumped about 50 percent since November to Tuesday's close after months
of weakness following its bungled Nasdaq listing in May.
analysts at J.P. Morgan Securities said the lack of a timeline for the
possible launch of graph search on mobile devices may weigh on the
The success of the graph search, which will rely
heavily on local information, depends on Facebook launching a mobile
product, the analysts said. Half of all searches on mobile devices seek
local information, according to Google.
Graph search also lacks the depth of review content of Yelp Inc, the analysts added.
Research Group analyst Brian Wieser said monetization potential would
be largely determined by Facebook's ability to generate a significant
portion of search query share volumes and he expects that quantity to be
"Consumers are likely to continue prioritizing
other sources, i.e. Google. Advertisers would consequently only use
search if they can, or are perceived to, satisfy their goals efficiently
with Facebook," Wieser said.
No Google killer
mostly agreed that Facebook's search tool was unlikely to challenge
Google's dominance in web search at least in the near term.
now, we do not see Graph Search as a threat to Google Web search.
Looking forward, Facebook Graph searches could be competitive with
certain categories of Google searches, such as Places and Maps," BofA
Internet search, social networking tools and
e-commerce are among the biggest weapons that companies such as
Facebook, Google and Amazon.com Inc have in their battle for supremacy. A
successful combination of the three could win the day for them.
has been trying to combine social networking and search for more than a
year by integrating Google+ into its search engine.
Graph Search offers users a unique view to information not available on
Google, but does not replace Google. We view the relationship between
Facebook Graph Search and Google as both competitive and complementary,"
Piper Jaffray & Co analysts said.
The brokerage said users
looking to buy a cellphone, for example, could search for friends'
reviews on Facebook and expert reviews on Google.
© Thomson Reuters 2012