The Social Solution to Monetization? E-Commerce.

By Nick O'Neill Comment

I just got off the phone with Patrick Chanezon, the OpenSocial evangelist over at Google. I will be providing a podcast of our conversation later this week. During our conversation Patrick mentioned that he thinks e-commerce will start playing a larger role in social applications. I’ve written about this before on AllFacebook but for some reason it struck a chord with me this time around.

I keep wondering what incentive Google has to be involved with OpenSocial aside from preventing Facebook from being a dominant player. While developers can use the Adwords service to monetize their applications, this isn’t the best solution. I keep trying to figure out how these sites are going to generate substantially more revenue and the only thing that I can think of at this is point is e-commerce.

Facebook has already announced their intention to let app developers monetize through an e-commerce system but Google has yet to announce anything. While Patrick could not comment on it, it only seems logical for Google to expand Google Wallet to OpenSocial. This will hopefully provide the kick that they need to take on eBay owned PayPal.

While the social networking arms race continues, Google and Facebook will struggle to figure out more effective monetization strategies for these new channels. Google has the luxury of a multi-billion dollar war chest and a growing billion dollar advertising business, not to mention a thoroughly developed payment platform. Facebook has a massive amount of pressure from investors to increase monetization and an incomplete payment system.

As advertisers turn away from social advertising due to the inherent risks in lack of control over user-generated content, the only obvious remaining solution is e-commerce. I think it may be time to spend more time focusing on e-commerce and payment system integration instead of advertising solutions. What do you think? Is e-commerce (or “social commerce”) the future of the social web?