NewNet Q3: Facebook remakes headlines in social media

1. Summary

Last quarter’s big headline in social media and real-time technologies came from Google, which launched Google+, its first social tech product that seems legit. In the third quarter, things were back to normal. Google+ is still growing, but Facebook’s platform update dominated the news. Facebook is weaving together auto-sharing platform services that work on and off its site with new content-discovery feeds filtered by an enhanced ranking algorithm. With its typical ambition, it seeks to launch a new breed of lifestyle apps.

Meanwhile, as Google+ passed 25 million users and won some raves from the digerati, its competition with Facebook intensified. Google’s core search business is under less threat from social media than some observers think, but it can’t risk getting cut off from the social media data that fuels a user’s “interest graph,” a potentially powerful indicator of purchase intent. And the two are staking out ground in a battle to create identity authentication and management services, a field in which companies like Microsoft and LinkedIn will also have a role.

The emergence of enterprise customer service, collaboration and marketing tools powered by social networks is more than just a buzzword. CRM powerhouse Salseforce.com calls this convergence “the social enterprise.” Companies that had been competing to service both collaboration and marketing from the same core platform are increasingly specializing their offering via feature suites and services.

A host of new products, as well as some new financing, helped the business ecosystem supporting social media advertising gain some solidity in the third quarter. Online advertising is a tough business — with Google and Facebook competing for ad dollars — but it’s growing at a 20-percent-plus rate in spite of a brutal economy. New social media analytics, tools and services from companies like Nielsen, WebTrends and Buddy Media will help big players like Facebook, but they’re also available to smaller players and startups, and social marketing spending is just starting to emerge in its own right.

But this strengthening social media ecosystem alone won’t be enough to turn Yahoo around. The once-prosperous portal has missed out on many of the hot trends in social and mobile media, and, after firing CEO Carol Bartz, is looking at all options — including selling all or part of the company.