There is an awful lot made of the battle between Facebook and Google for dominance of the web and I have argued for some time that Facebook will eventually win this battle. The reason that I have argued that the social media giant will defeat Google is because people live inside of Facebook, people tend not to do the same with Google. I know that if you have a Google profile and you use Google Docs and Gmail then you might argue that you DO live in Google, but the number of people that do that is miniscule compared to those who sit on Facebook all day.

I admit that Google is the most popular search engine and that it is still the most popular site on the web, but Facebook is catching up. At their heart each site serves a different purpose. With Google you are tending to find out about things, you conduct a search and then click on the links that entice you the most. When you look at the Searc h Engine Results Page (SERP) then Google displays the ads that keep Google going. With Facebook users do not leave the ecosystem, they are effectively a captive audience and Facebook keeps drip feeding ads to their users. At this time the Facebook ad click through rate is not very high in comparison to that achieved with Google Adwords, but this may be as much to do with the fact that the ads work in a slightly different way.

With Adwords your ad will appear when specified keywords are searched for and those keywords are highlighted, helping to draw your eye to the ad. By choosing a keyword to trigger the ad you have a very targeted ad campaign. With Facebook advertising your ad is triggered by demographics, location, gender, age etc and none of the text is highlighted which means you are less likely to have your eye drawn to the ad and your ad will appear to a lot of users who will have no interest in your product or service.

I think that marketers have yet to discover the true power of Facebook advertising, personally I believe that the ads that will work are most likely to be for local businesses who can get a message out to their local audience.

We keep seeing a cosier relationship developing between Facebook and Bing, the search engine from Microsoft. This week Bing have announced in a blog post that they will start to give a higher weighting to pages with Facebook “Likes” than they have done before. I can see this integration between Facebook and Bing increasing as it is in both their interests to take on Google. Especially when you consider that a 1% market share of the search market is estimated to be worth $1 billion. I used to think that eventually Facebook would buy Bing to try to provide a full search facility to compete with Google, but now I have changed my mind.

If Facebook could integrate Bing fully into its ecosystem what would the real benefit be? Yes, they would get some of that search market share but does that really help to advance Facebook? Not really, Facebook like you to just exist inside of Facebook, not start going off to other sites, so how can they take over the online world?

The first sign of this may have already happened. On 07 April 2011 Facebook announced the Open Compute Project. This is a project that has created new server technology that boasts that it is 38% more energy efficient and 24% cheaper to build and run the servers than in traditional data centres.

This means that Facebook may eventually start to offer relatively cheap web space to companies. This on its own will not take over the online world but if Facebook could offer a shopping cart and payment gateway then they could. Imagine a scenario where you are offered a hosting platform that allows you to sell online to all those people on Facebook. You might have a traditional business such as being a mens clothes shop in Blackburn. You want to sell online but know that it will be very difficult to compete with larger retailers in a national market but that you have a good name in your local area for offering quality and value. Now think about what I said abolut Facebook Advertising being led by demographics. Our shopkeeper in Blackburn can target that his ads only show to males aged between 18 and 30 who live within 10 miles of Blackburn who are interested in fashion. The people that see the ad may well know about the business already but may not be aware that there is an end of season sale on right now.

With the system that I am proposing you will still have your Facebook business page but as well as the usual features such as your wall and photos you can have a store section that allows you to sell your goods directly to other Facebook users.

From the users perspective as the system grows then you will start to search within Facebook for the goods and services that you require. Over time people will use traditional search engines less and less and more worryingly for the search engines advertisers will buy ads less and less.

Facebook already have Facebook credits that allow users to buy credits from Facebook that can be used to buy virtual goods within Facebook games. All I am proposing is that this system is expanded. Users would pay for their credits and then trade these with the store, the store can then redeem the credits and download the cash into their bank account. This means that there is no chance of chargebacks for the business as Facebook will be guaranteeing the money.

Admittedly this leaves Facebook susceptible to chargebacks, but they can then employ the best security people and deploy the best security systems to help protect themselves.

There is another great advantage for Facebook, people will be handing over their cash to buy the Facebook currency. This means that Facebook get to keep the money for a little while, invest it and earn a little bit of interest on it in the process. On an individual basis this may not be much but when you think about 600 million users then there is the potential for Facebook to get its hands on an awful lot of currency. If Facebook were a country of 600 million then only China and India would have a greater population.

You could potentially end up where Facebook credits become an internationally recognised currency like the dollar, pound sterling, Euro and Yen.

So this is my vision, people get up in the morning and check Facebook, not just to see what their friends are doing but to check the status of the order that they placed the night before.  They might do a little bit of shopping before breakfast, they might even order breakfast via Facebook. They will be able to search not just for friends but for specialist businesses such as wedding planners, yoga teachers and insurance without ever leaving Facebook.

One day people might well ask “Do you remember Google?” and the reply “Yeah, what was it they did again?” The Social Network may well become The Commercial Network.