Facebook Will Make 'a Lot' of Money Off Search: Analyst
Technology Editor, CNBC.com
Facebook's stock may have taken a hit on news that the social giant is launching a new search feature, but the social giant is actually poised to cash in on the search market, Lou Kerner, managing director for the Social Internet Fund, said Tuesday on CNBC's "Closing Bell."
(Read More: Facebook Rolls Out Social Search Feature )
"Mark Zuckerberg is a slave to data, he sees what people do and then he iterates and he iterates and he iterates. Search is the holy grail of internet advertising, Facebook is going to make a lot of money," Kerner said. "The market has continued to underestimate Facebook, they underestimated that it was ever going to make any advertising revenue and then they underestimated that it was going to make mobile ad revenue, now they are underestimating search revenue."
Facebook's new search function, which launched in beta on Tuesday, is called Graph Search and allows users to search information on the Facebook platform that has already been shared with them.
While the Social Graph is limited to Facebook's platform and not a global web search service like Google, the new feature will still help Facebook's revenue stream because it means users will likely spend more time on the social network, which means advertisers will want to spend more money to promote products and services on the platform.
"The bottom line is advertisers want to reach people and the way they reach people where they are spending time... and they reach them also when it's most valuable, when there's intent and Facebook is increasingly going to be there during that intent period of the purchase funnel," Kerner said.
People are spending more and more time on Facebook's platform and accomplishing more tasks, like shopping, and the more tasks they perform on Facebook the more users will need and use search, he said.
"We like this a lot. This is evolutionary, not revolutionary. But the big pillar of Internet advertising is search and now Facebook is getting in it in a big way," Kerner said. "They're just getting into search, they're going to be huge in e-commerce, they're going to be huge in video, this is going to be—along with Google—the King of Internet."
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