Facebook Gets Sandberg, Google Loses Face

Facebook has a new honcho. The Web upstart-turned-conglomerate has lured away Sheryl Sandberg, Google’s ad platform guru, to join its team as chief operating officer.

Sandberg, who was with Google for six years, made an indelible stamp at the organization as she built out the Adsense and Adwords product lines. At Facebook, she will lead sales, business development, public policy and communication, reporting directly to CEO Mark Zuckerberg.

How effective a corporate raid was this for Facebook? Good enough to cause shares of Google to fall on the news, noted market analyst Fred Ruffy.

All About Timing

The timing couldn’t be any worse for Google, Ruffy told the E-Commerce Times, as investor enthusiasm in the stock has already declined precipitously.

“Prior to the news, the stock was down 33.8 percent on the year,” he noted. After the news was released on Wednesday, it dropped another US$12.42 to $444.60.

Sandberg’s timing, on the other hand, seems to have been right on.

Google has been under fire due to worries about a decline in paid clicks, Ruffy said, and data ComScore released last week show a decline in the frequency of clicks on sponsored search links.

“Meanwhile, Facebook has rapidly grown into one of the most popular social-networking companies,” Ruffy observed. “The company’s 23-year old founder now needs help in finding ways to generate more revenue to offset rapidly rising costs. So, Ms. Sandberg is being brought in to help Facebook develop a better advertising system to generate more revenues. For Google, it is a sign that Facebook is not only drawing online visitors away from its services, but also drawing talent from within its management ranks.”

To-Do List

There is no end to the speculation about what Sandberg plans to tackle when she begins work at Facebook. One possibility is that she will focus on strengthening its ad sales efforts overall, suggested Michael Boland, senior analyst with the Kelsey Group.

That could encompass small business and local advertising through its recently launched Pages and Ads products. “These allow small business to set up profile pages, connect to other Facebook users, and send targeted messages,” he told the E-Commerce Times. “The company will have to market these ad products to small businesses more meaningfully, and Sandberg could have a big part of getting that done.”

Sandberg might really be able to add value to Facebook around the integration of CPC (cost per click) opportunities into the platform versus its serving as just an ad unit, Tom Zawacki, cofounder and CEO of Lemonade, told the E-Commerce Times. He’s somewhat doubtful that goal will be realized, though. “Overall, it’s a great move for Facebook, but I am not convinced they will apply any new thinking to the CPC offer.”

Facebook faces several key issues in order to successfully monetize its traffic, noted Jordan Hudgens, CEO of VidShadow, a California-based online broadcasting network, not the least of which will be getting companies to feel comfortable having their advertisements associated with questionable content.

“Sheryl Sandberg has a very clear vision of both sides of the market, referencing advertisers and publishers,” Hudgens told the E-Commerce Times. “With her at the helm, Google has spent years creating a network of Web sites with their Adsense program, and they have overcome the very same challenges that Facebook now is up against. She will be an incredible asset to Facebook and, in my estimation, will help to develop the company into much more than purely a social network.”

The Facebook Problem

That, of course, is the same trajectory Google was on in 2001 when Sandberg joined the firm, albeit instead of a social networking site bent on expanding into new territory, Google was a search engine determined to morph into something completely different.

Whether its mystique has peaked is the big question. Sandberg is not the first employee to defect to Facebook, Boland noted, although she is certainly the highest-profile.

Google is reportedly calling the unhappy trend its “Facebook problem.”