Why Google+ doesn't really solve the real problem when it comes to monetizing a social network

I have been following the commentary on the rapid growth of Google+ and how Circles solves the Facebook problem with some interest (e.g. David Armano’s Google Figures Out Humans). Perhaps the best piece I have read so far is Scott Roseberg’s Circles: Facebook’s reality failure is Google+’s opportunity. In this post he canvases how Google+ solves the two biggest problems with Facebook (i.e. Real People or how “friend count” became the new “unique visitors” and how “Facebook flattens our social relationships into one undifferentiated blob“).

What Scott’s commentary misses, as has all of the commentary I have read so far, is the real challenge Google+ has to resolve isn’t delivering the tools to create a better social graph (i.e. resolving the “Real People Real Friends” problem) but figuring out how do to monetize the social network (e.g. by turning it into a platform for “real-time” commerce).

“Commerce on Facebook today is infinitesimal – less than 1% of all eCommerce volume“. – Karen Webster, Why Facebook is Ripe for Commerce suggests

You see the real challenge that Facebook is struggling to resolve is advertising doesn’t really work on Facebook, or any other social network for that matter, simply because people don’t go there looking for products. They go there looking for people. If they are looking for product they either ‘Google’ it or head towards one of the major eCommerce platforms (e.g. eBay or Amazon).

Twitter and LinkedIn face the same challenge. How do you turn the fashion show and the posturing passing parade into a viable commerce platform?

The idea of using people’s social networks to sell products to family and friends is not a new business model. MLM has been a part of the US business world since at least the 1940′s accounts for about 0.2% of retail sales in the USA.. In 2009 more than 16 Million people in the US were reported to be actively involved in this $28 Billion direct selling industry that includes popular household brands like Amway, AVON, Herbalife and Tupperware.

So although Google+ may well prove to be a better Social Network than Facebook, LinkedIn and Twitter combined in reality it solves the imagined problem rather than a real problem. Yes people spend a lot of time hanging around on Facebook. But they are not shopping. They are too busy socializing and playing games.

Social networks are like coffee shops… but without the coffee sales to provide the revenues. People spend a lot of time drinking and socializing in coffee shops.  You may find them occasionally talking about products but they are not shopping. So the best you can hope for is to gather more information to feed your social graph when the real trick isn’t to monitor the conversation but to pivot them when they get up and start shopping again.

Do you need to own and operate a social network to take full advantage of that pivotal moment? I’m not so sure you do. After all are coffee shops in business to make money out handing out coupons as customers leave the store? No they are in the business of keeping customers in the store drinking more coffee and eating more cake. They want you to stick around. Just like the social networks. That’s why inviting them to hang around to play social games makes more business sense than pushing ads, coupons and social shopping.

What I was expecting from Google wasn’t a next generation Social Network but a Social Wallet. A meta level that sat across all the social networks and all the eCommerce platforms to create the definitive Find Me, Find You and Let’s Exchange platform sitting on your mobile phone and on your web browser. In this way Google could have pivoted Social Media and eCommerce in much the same way that it has pivoted traditional media.

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