Why are tech industry titans so bullish on the concept of the interest graph? And why are CEOs, venture capitalists, and industry experts predicting big things for the company that can capture it?

The Basics

The fact that you follow Snoop Lion on Twitter and like Starbucks on Facebook means something. It’s important to a lot of people. One person likes nonagenarian actress Betty White and another likes hipster musician La Roux; one person likes Method soap and another likes PUBLIC Bikes; that’s worth a few cents to NBC, Arista Records, Tide, and Specialized.

Why is that? Because knowing what you love helps businesses understand what new things you might like. Relevance is the magic ingredient. Brands, bands, games, and teams you like are highly relevant to you. And for businesses who want to find people who might like what they’ve got, relevance is king. Advertisers have always been interested in what you like, and the fastest, simplest, most transparent tool for knowing what people like is something called the interest graph.


The Interest Graph Is the Ultimate Recommendation Engine

The interest graph could ultimately prove to be the best indicator of brand affinity. In this report, we’ll explain how that’s possible by walking through what the interest graph is and how it’s analyzed.

“Interest Graph” = “Virtual Diagram of Connections to What We Love”

The terminology is easier than it looks: A graph is a picture of the connections between objects. The picture can be real or imagined; what we care about is the data, not necessarily producing a physical graph. Objects, in this case, are people and things. In the interest graph, we understand what things every person on the graph is interested in. Imagine a young woman named Andrea living in San Francisco. Andrea loves swimming, but you wouldn’t know it by looking at who her Facebook friends are. Her Facebook friends include cousins, high school friends, college roommates, and co-workers. But if you knew that Andrea follows swim blogger @speed_endurance and Olympic swimmers @RyanLochte and @DaraTorres on Twitter and that I liked my local pool and Michael Phelps’s nonprofit for kids on Facebook, you could figure out she was an aquaphile.

The Interest Graph is growing in importance for social companies as they build out their future business plans. Because advertising is the main source of revenue for online businesses (see: Google), knowing which ads to show to whom is key to sustained happiness for both users and advertisers.

Technology Leaders Put Their Weight Behind the Interest Graph

The interest graph has attracted attention from technologists for its potential to deliver relevance for advertisers. Dick Costolo, CEO of Twitter, has said that the interest graph will offer “powerful value to advertisers.” And Naval Ravikant, founder of AngelList and investor in Twitter, wrote in TechCrunch that “the interest graph lends itself brilliantly to commerce.”

The interest graph holds big value for app developers too. Airtime, for example, launched a much-touted video chat app that analyzes Facebook’s interest graph to help match like- minded participants. Sean Parker, founder of Napster and investor in Facebook, describes the interest graph as a powerful tool for creating “a very nuanced view of people.”

And Benchmark venture capitalist Bill Gurley, in conversation with Goldman Sachs, explains why he values the interest graph, especially over a concept like the social graph (a concept we’ll explain more later):

Social graph signals have not been helpful in optimizing advertising. It seems intuitive to everyone that your friends’ recommendations would be powerful motivators…but when you look a little deeper, you hang out with people who have very different tastes than you. And you may have a special affinity through a hobby or something that they don’t share. One of the mythical high grounds that everyone’s thinking about…is this notion of an interest graph. Facebook connects you with people you know. But what connects you, if you’re into road biking, with the top 15 road bikers that are within 15 miles of where I live?

[For a platform to] capture the interest graph, they’d be closer to the Google search paradigm, because they’d be right in line with demand generation, and with discovery that relates to product purchases. Context, for the history of the Internet, has been a big deal. The websites that do verticals, while they may not have abundant traffic, have always had huge CPMs, relative to the “Yahoo! Mail”s of the world. That may be this middle ground, between search and the social graph, to bring together people with like interests.

Contributors: Jon Elvekrog, John Manoogian III, Vanessa Naylon & Lau Ardelean