Despite repeated attempts, Google has so far failed to make much headway in the world of social networking. The company’s inability to do so is becoming a bigger and bigger issue, and particularly where Facebook is concerned. The social network continues to grow at a rapid rate — it recently crossed the 500-million-user mark — and as a result is becoming increasingly more attractive to the advertisers Google also covets.

But now there are reports Google is working on a social network based around games as a way of competing in that space. Is such a move going to get the company to where it needs to be and turn it into a noteworthy competitor in the social networking sector?

The problem: Users want to be social

Internet users want to socialize, whether by posting status updates and photos on Facebook, playing social games such as Farmville or Mafia Wars or by checking news reports and commentary on major events through Twitter. According to a recent study, the average American user of the Internet spends more than a third of their time on social networks.

Google may be trying to tap into this opportunity, but a major problem here is that the search giant doesn’t really have a major stake in either social networking or gaming. It runs Blogger, but the service has not seen much investment or new features for some time. And when it comes to games and social networking in general, the web giant has virtually no presence. There are social games that can be embedded in iGoogle pages, but they are relatively unsophisticated and have not gotten a lot of traction so far. Both Wave and Buzz have also failed to capture much attention from users (Google recently announced it is shutting down Wave due to lack of interest).

Where users are, advertisers go

An even bigger problem for Google is that advertisers go where the users are, and as stated above, those users are spending more and more time on social networks. Advertisers also seem to be increasingly interested in the ability that social networks like Facebook have to target users based on their age, sex, marital status and other demographic characteristics.

Google gets hundreds of millions of users doing searches every day, and it has made billions of dollars by targeting ads at them based on what they are searching for. But as Om has pointed out, the potential for targeting or reaching users based on their social-networking activity is a competitive threat for the search giant, and standing up to that threat is something Google seemingly has no handle on, judging by its recent behavior. The company added real-time social activity to its search index by licensing the Twitter data “firehose” (and revamped its indexing methods in order to do so, as described in a previous GigaOM Pro report). It also hired “open web” advocates such as Chris Messina, but so far it has shown no signs that it has a coherent social strategy.

Google’s failure to develop much in the way of social networking features or services appears to be a result of its corporate DNA. The company is driven predominantly by engineers, who according to many reports, don’t really understand or appreciate the value of social networking. Former staffers have said the company is very good at analyzing and responding to issues that involve technical software requirements, but isn’t nearly as good at recognizing what drives human social behavior. Google has appointed a “head of social” to help them grapple with this problem, but whoever takes that job is going to have a mountain to climb in terms of developing the social element at the company — and of leveraging the related ad revenue.

Can games make a difference?

According to a number of recent reports, Google sees social games as a way to build a network that can help the company blunt some of the competitive threat Facebook represents. In order to accomplish this, the company is said to be in talks with several social-game makers, including Zynga, the market-leading developer of Farmville, Mafia Wars and half a dozen of the other most popular Facebook games. Google CEO Eric Schmidt acknowledged in an interview with the Wall Street Journal that a partnership with Zynga is in the works, and there have also been reports that the search company has invested as much as $100 million for a stake in the game maker. Google also recently acquired a small social-game company called Labpixies (which makes some of the games that can be embedded on iGoogle pages) and hired a game industry veteran to be its “developer advocate.”

But can games give Google enough social oomph to really make headway against Facebook? It’s not clear that they can. Even if the company gets Zynga and other social-gaming companies such as Playdom (recently acquired by Walt Disney Corp.) and Playfish (now part of Electronic Arts) to design games, any resulting product is unlikely to be significantly different than the games those companies are already making and distributing through much larger venues such as Facebook and MySpace. In other words, what is Google going to bring to the table that is unique? If it’s just a me-too kind of social game experience, that’s not going to do much to set the company apart (or draw advertisers).

What’s also not obvious is how games would fit with Google’s other offerings  to present a cohesive social offering. In many ways, social gaming makes more sense as an addition to an existing social platform (as it was with Facebook) rather than a shortcut to creating one from scratch. And even if users start to develop a fondness for Google’s games, how is any of that activity going to tie into the company’s other existing services — Buzz, Wave, Blogger, Reader — to create a cohesive social network that provides a meaningful context for users and at the same time has a definitive advertising strategy?

The bottom line

The most important thing for Google is that it needs to understand and appreciate what social networking offers users before it tries to launch a network of some kind, not after. And there have been virtually no signs the company truly understands what makes Facebook so powerful, or why users spend so much time on it. While Google excels at appealing to “task oriented” users — those who simply want to search and quickly find something, then leave — it has so far failed to appeal to those who want to hang around and socialize, a group that advertisers are increasingly interested in. If the aforementioned examples of Wave and Buzz are any indication, Google has a long way to go before it figures that out. Until that time, the search giant will continue to find itself on the outside of the social networking phenomenon, looking in.