Is the web shrinking? It is according to Ben Elowitz, founder and CEO of WetPaint. He recently wrote a very interesting guest post for AllThingsD about this topic, and we decided to pick his brain a little bit more.

“People are spending more time on Facebook and less time on the rest of the web,” he tells WebProNews. “If you look at the total amount of time people spent on Facebook from March 2010 to March 2011, it grew 69%.  And if you look at the total amount of time people spent on the rest of the web, it fell 9%.  This was staggering to me and it highlighted the critical importance of understanding and using the social web in an intelligent way. ”

He provided the following graph:

So if Facebook is taking consumption away from the rest of the web, we do we so often hear how great a referrer of traffic Facebook can be?

Elowitz says, “There is no doubt that Facebook is and will continue to be a strong referrer of traffic.  Facebook has a deep relationship with their audience that starts its day with Facebook and uses it as a hub for the content they consume.

“Unlike Google and portals, which were intermediaries, Facebook is a home base; so users BOTH spend significant amounts of time at Facebook, and follow links to other sites.,” he continues. “That’s why even as Facebook is taking time away from other consumption, it’s also now the second most important – and rising – traffic distributor for most audiences.  Like any distributor, a company needs to optimize for it and, let’s face it, Facebook is growing more complex each day.  It’s not about just posting content into a newsfeed and calling it good.  It’s much more. Media companies that do not invest in understanding and taking advantage of Facebook, will lose to socially-optimized competitors.”

We’ve recently been exploring this concept of the “Filter Bubble,” as Eli Pariser coined in a TED Talk – essentially the concept that web users are presented with a narrower view of available content based on search results, the Facebook News Feed, and many other sites personalizing content based on what they think is most relevant to us, while filtering out other content from visibility.

Elowitz’s take on this is: “I am a big fan of personalization because it can deliver the ultimate value to consumers.  Let’s admit that most of us are exhausted trying to find what is most important or relevant to us.  Think about how much time we spend searching for something.  It’s a lot.  If done right, personalization can cut out this immense time waster and deliver value much more quickly.  That said, there are inherent risks with filtering what content is surfaced or is not surfaced based on a profile.  This is a complex area and right now I am betting on the social web, and in particular, Facebook with their focus on building a world filled with identity.”

In his original article, Elowitz suggested that the “searchable web” is becoming less relevant. Would this mean that search itself is becoming less relevant? Perhaps it’s about the situation. I’ve written about this before to some extent. New services and apps that have emerged over the years have chipped away at our need to search in different ways, and will continue to do so. It’s not that search is becoming less important, it’s just that we don’t need it in as many cases as we used to. We’re simply finding different ways of consuming information.

“Search is highly relevant for users with a strong intent to find specific information or transact,” says Elowitz. ”For example, when you are looking to buy a plane ticket, search will deliver you optimal results.  As I mentioned in my post, search offers a utility relationship, connecting users to content for the briefest of transactions; for media, typically, it provokes users to just one page-view so they can find a piece of information, and then they move on.”

In his article, Elowitz said, “In the last year, Facebook’s share of users’ time online grew from one out of every 13 minutes of use nationwide, to one out of every eight. In aggregate, that means the document Web was down more than half a billion hours of use (that’s more than 800 lifetimes) this March versus last March. And in financial terms, that represents a lost opportunity of $2.2 billion in advertising inventory that didn’t exist this year.”

“There’s no way to know for sure what the exact amount is, since this is truly a lost opportunity versus what could have been,” he tells WebProNews. “But if the 9% decline in the rest of the web’s consumption were mirrored by a 9% decline in inventory (a reasonable, but uncertain, assumption), then it could have been much bigger than the $28.5B that eMarketer currently estimates the industry at.  For the $2.2 billion estimate, I subtracted Facebook’s estimated $4 billion in revenues from the $28.5B to get ad spending on the rest of the web; and took 9% of that remainder.”

So, what does it all mean for SEO? Will social media visibility become more critical than search visibility? Is this already the case?

“Over the last decade, there has been only one great distributor of traffic; and the vast majority of digital media companies have done everything they can to please that deity in the hopes of earning more traffic,” says Elowitz.  “But that was then; things have changed dramatically.”

“Investing in SEO will not help build the most important long-term value, which is a strong and loyal relationship with your audience.  Given the rise of the social web, there is a huge opportunity for publishers to develop relationships directly with users and this will help the company massively long-term.  This is why SMO (social media optimization) is more critical than SEO and why at Wetpaint we do not invest significantly in SEO. We know that if you focus all of your energies on winning in social, you will receive a halo effect from search.”

He claims the Wetpaint Entertainment media property still generates over 50% of its traffic from search with no SEO team, employee or consultant on staff.

In a recent newsletter, Elowitz gave the following advice to publishers looking to harness the power of social media:

• Know your economics.  We know what a Facebook fan, an impression, a transfer to our web site are worth.  On our Wetpaint Entertainment website, we’ve found that depending on how well we program a fan page, we can get 5 to 15 newsfeed impressions per active fan per day in the newsfeed.  We see a transfer rate of 1% to 3.5% to our web site, and we multiply that by our repeat rate and on-site monetization to arrive at our lifetime customer value by channel.
• 
Know your social promotion factors.  We measure three key actions:  Like, Share, and Comment.  Industry benchmarks don’t cover it, and actual value varies enormously site by site.  Looking at Likes and Comments for our “average” TV channels (e.g. Gossip Girl,American Idol), each interaction generates close to two new visits.  Knowing this lets us manage the opportunity to delight existing audience while engaging them to reach new potential audience.
• Segment your fans so you know what works for whom.  Facebook doesn’t make this easy, so it will need to be a creative D-I-Y project.  While there’s not much support for segmenting a million fans of one brand page, you can set up multiple “honeypot” pages and compare via an A/B split test; or create subtopics that you can compare.  We found, for example, that our click-through rate on our best performing channel was more than 2X better than average, while impressions-per-post can vary by more than 10X from highest- to lowest-performing channel.  (Each of these gaps is an opportunity to improve, as I’ll discuss below.) 

• Relentlessly experiment and measure.  At Wetpaint, we’ve made this a dedicated effort with a dedicated team:  we call it “Black Ops,” and our special forces have the freedom to try whatever they can dream up – as long as they can measure the value of it.  We validate the winning experiments and put them in our Playbook to roll out across all our properties.  It’s rapid iteration at its finest. We can have a dozen or more experiments running at any given moment, and typically they take just 1-2 weeks to get a read on.
• Turn differences in performance into best practices.  At the channel level, we scrutinize performance differences and determine by further experiments which factors control the outcomes.  Then, post-level analytics show how each post performs relative to average.  This reveals nuances of Facebook’s EdgeRank algorithm, so we can understand small changes that drive big impact on reach and engagement.  That’s how we found that posts that include photos outperform posts that don’t by 50% or more; it’s also how we unearthed dozens of other insights that we have incorporated into our practices every day.