Is Facebook’s Graph Search a Google Killer?

Facebook Graph SearchFacebook (NASDAQ:FB) leaped into the online search market with its “graph search” tool that was unveiled last Tuesday. While it is a big step for the company, which has made efforts to monetize its social network a priority, Wall Street analysts are not expecting the platform to challenge the dominance of Google’s (NASDAQ:GOOG) search engine.

Here’s what they are saying:

Allowing users to sift through their network of friends to find restaurant and movie recommendations could make the social network’s search tool competitive with certain categories of Google search, like its “Places” and “Maps,” wrote analysts at Bank of America Merrill Lynch in a research note seen by Reuters. The firm further noted that those results could be easily incorporated and supplemented with commercial results provided by Facebook’s partnership with Microsoft’s (NASDAQ:MSFT) Bing.

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Merrill Lynch analysts estimated that the search tool could add $500 million in annual revenue if it can produce one paid-click per-user-per-year, and lifted their price target on the company’s stock to $35.
GraphSearchBut the true measure of the platforms success and its monetization prospects will be determined by whether Facebook can generate high search traffic. However, this could be difficult, especially as it the graph search cannot match Yelp’s (NYSE:YELP) depth of review content. “Consumers are likely to continue prioritizing other sources, i.e. Google,” said Pivotal Research Group analyst Brian Wieser to the publication. “Advertisers would consequently only use search if they can, or are perceived to, satisfy their goals efficiently with Facebook.”

In a recent article, TechCrunch’s Josh Constine explained Facebook’s graph search has far greater potential than Merrill Lynch’s one paid-click per-user-per-year model would suggest; while there are no advertisements on its search engine yet, the company could allow advertisers to pay to show particular brands or restaurants above organic results, like Google does with its search.

During the launch’s question and answer period, the company’s chief executive Mark Zuckerberg even told Constine that the new platform “could potentially be a business over time.” Facebook already uses a similar model for its search typeahead ads, and Zuckerberg said that the same system could be extended to Graph Search results…

For Wired contributor Steven Levy, the graph search platform has an edge on the competition: its wealth of user data. “Nobody has feared this day more than Google, which suddenly faces a competitor able to index tons of data that Google’s own search engine can’t access,” he wrote. This database will differentiate Facebook Graph Search from Google’s platform.

“Instead of a Google-like effort to help users find answers from a stitched-together corpus of all the world’s information, Facebook is helping them tap its vast, monolithic database to make better use of their “social graph,” he added. The social graph is what Zuckerberg has termed the social network of relationships that includes friends, acquaintances, favorite celebrities, and preferred brands.

Investing Insights: Will Facebook Outperform with Graph Search in Tow?