Wednesday, February 22, 2012

(BN) Google Is Poised to Overtake Facebook in U.S. Display Advertising by 2013

Bloomberg News, sent from my iPhone.

Google Poised to Overtake Facebook in U.S. Display Ads Next Year

Feb. 22 (Bloomberg) -- Facebook Inc. will lose its lead to Google Inc. in U.S. display-ad revenue next year as the social- networking service's advertising growth slows, according to research firm EMarketer Inc.

Google will grab 19.8 percent of the market in 2013, generating $3.68 billion, while Facebook will attract 17.7 percent, or $3.29 billion, New York-based EMarketer estimates. Facebook had taken the lead from Yahoo! Inc. last year, and it should maintain its edge through 2012 in the market, which includes ads with pictures, videos and other visual elements.

Facebook and Google, both relative latecomers to the display-ad market, have shoved aside other rivals to become the industry's main contenders. Facebook took the lead by peppering its burgeoning social networking with small ads. Google, meanwhile, expanded from its origins in text-based search-engine links. It now sells a variety of graphical advertising on websites, mobile phones and YouTube clips.

Facebook, with 845 million users, needs to do more to persuade big brands to spend money on marketing, rather than just having them set up free company pages on the social network, said Debra Aho Williamson, an analyst with EMarketer.

"It really comes down to brand advertisers," she said. "They just need to do a better job of convincing the big advertisers that ads are effective and that they perform."

IPO Filing

Facebook, which filed for an initial public offering this month, is coping with slowing revenue growth. Sales rose 55 percent to $1.13 billion in the fourth quarter from a year earlier, after more than doubling in the previous three quarters, according to a regulatory filing. EMarketer expects Facebook to reach $6.1 billion in total revenue this year, up from $3.71 billion in 2011.

Facebook filed this month to raise $5 billion in the largest initial public offering of an Internet stock. The Menlo Park, California-based company is considering a valuation of between $75 billion and $100 billion, people familiar with the matter have said.

Facebook and Google will tighten their control over the industry in the coming years, EMarketer said. Yahoo will account for 7.5 percent of the U.S. display market in 2014, down from almost 11 percent last year. AOL Inc. will drop to 3.7 percent from 4.3 percent. Google will have 21.7 percent in 2014, with 17.1 percent going to Facebook.

Google is benefiting from its longstanding leadership in search-based marketing, according to EMarketer. Including that, the company will have 47.4 percent of the total U.S. online ad market in 2014, up from 41 percent last year. Facebook will rise to 7.1 percent from 5.4 percent, EMarketer estimates.

Google also benefits from its ad network, which places marketing messages on sites outside of the Mountain View, California-based company's own properties, said David Hallerman, another analyst with EMarketer.

"Don't underestimate the importance of existing relationships," he said. "Google has relationships with more major brands than Facebook does."

To contact the reporter on this story: Brian Womack in San Francisco at

To contact the editor responsible for this story: Tom Giles at .

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