How will Google+ make money?

Google+ is clearly Google’s most successful foray into the social web thus far, and it looks set to get a lot of usage. One thing puzzling many commentators, however, is the business model.

Google have stated that they will not be putting advertising on Google+, so its primary business model is seemingly being foregone. Other very successful Google services and products, like Google Docs also don’t have advertising on them, but Google Docs is by no means as obvious a choice for advertising space as Google+ is. So…what’s the deal?

There is no doubt that the choice not to put advertising on Google+ will have considerable competitive advantages in terms of user adoption. Facebook appears messy and inundated with adverts in contrast to the beautifully minimal Google+. There is a certain kind of calm and feeling of trust that is inspired on Google+, perhaps because one feels no need to filter commercial messages from truly social ones as is the case on Facebook and Twitter. This kind of enhancement of the User Experience may turn out to be a subtly powerful factor in the success of Google+.

We are no closer, however, to understanding how Google hopes to generate revenue from a product which has clearly taken a lot of investment, and will do so on an ongoing basis. The most likely explanation at present is two fold — in fact, two sides of the same coin. Google wants to make a highly successful social layer, that will permeate people’s browsing behaviours so that people will both a) spend more time on Google web properties, and b) spend less time on large competitors’ sites such as Facebook.

Tom Anderson, one of the creators of MySpace explained it succinctly (in a Google+ thread) when he said:

“…are you starting to see the ways that Google+ just makes Google a better, more integrated set of services? Google already has top-notch products in key categories — photos, videos, office productivity, blogs, Chrome, Android, maps and (duh) search. Can you start to see/imagine what Google+ does for Gmail? Picasa? Youtube? Not to mention search? The +1 system that Google now has control of (unlike Facebook Likes) can really influence and change the nature of their search…

…everything gets better when its social. And unlike FB, Twitter, or anyone else, Google already has the most advanced set of products. And if I can clearly see where this is headed, then I think what we are getting is a much better Google. Does that kill FB/Twitter? Who cares? I’d use all 3, but more importantly, I’ll be using Google products I never used, or use them in new, better ways I never used them before.”

In essence, Google may be hoping to bind all of their products and services together in a way which makes the whole amount to more than the sum of it’s parts. The enhancements Google+ will bring to other Google products from a User Experience perspective should make people use them more, and use more of them. This brings clear business benefits to Google.

On the flip side, a few months ago the interwebs were abuzz with talk of the great Google vs. Facebook war – the war of where we find content. Was ‘social’ starting to trump search as a primary starting point for people’s discovery of content, products and services online?

Google+ is a gamechanger in the context of this debate for a couple of key reasons: Firstly and most obviously, Google+ means that overall, people will be spending less time on Facebook and more time on Google+. More and more people will be discovering content socially through Google (as well as via search), all at the expense of Facebook’s slice of the pie.

Secondly, Google+ changes the very foundation that this war is based upon. It erodes the distinction between search and social, and will likely have a large impact on Google’s already more socially integrated search results pages. Facebook is not, and arguably never will be, a destination for search behaviour but Google is certainly now a viable destination for discovering content shared within (one of) your social circles.

Thirdly, there is the ‘sub-war’ of the Facebook ‘Like’ button and the Facebook social graph, versus the Google +1 button (effectively the Google social graph). While the Facebook ‘Like’ button is currently far more ubiquitous, it still only has true significance within it’s own world — the world of Facebook. The significance of the Facebook ‘Like’ button in the Google search rankings is obviously at the mercy of Google. The +1 button, on the other hand, delivers the same value as the Facebook ‘Like’ button, in terms of sharing content socially and creating personal indexes of preferred content but it also has powerful integration with Google’s already leading search service.

This added social layer, in the form of the +1 button, the enhanced, Google owned social sharing on Google+ and the meshing together of Google’s suite of products contributes, both directly and indirectly, to Google’s bottom line. Strategically, it staves off competition by impacting on the amount of traffic competing businesses have to capitalise on.

Conversely, it will likely increase traffic (both in absolute terms, and in terms of engagement and interaction) on Google properties where adverts are shown. It will also bring a wealth of increased targeting and profiling data to advertisers, something always at a premium – especially when the data is so qualitative and meaningful.

Finally, it starts to build Google as a platform which goes beyond the desktop, and even the mobile ‘computer’. Google Mobile offerings before Android (and even after, to a certain extent) have been mostly recreations of their desktop services (aside from location based services such as maps and latitude). Google+ brings a far richer and more relevant mobile experience to people who might previously have only really thought of Google as a starting point for searching.

As Google moves into television, and presumably other areas of our lives soon to be integrated with the digital world, control of a platform which promotes more personal relationships  — not just between different customers, but also between customers and the Google brand — might just turn out to be an incredibly smart move. Google+, +1.