Google to Take Down Facebook!
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The digital advertisement business in the US is big and it is estimated that marketers will spend around $37.31 billion in 2012. According to eMarketer’s prediction digital ad spending will rise around 16.6%.
Some of the big names we can associate with online advertisements include Google (NASDAQ: GOOG), Facebook (NASDAQ: FB), Yahoo! (NASDAQ: YHOO), Microsoft (NASDAQ: MSFT) and AOL (NYSE: AOL). Together these companies are expected to take in $23.9 billion in ad revenues which is nearly two-thirds of the total digital ad spending this year.
Last year, Facebook was able to reap around $2.19 billion in display-ad with a market share of 17.7 per cent in the US. Facebook topped the list of revenue from display-ad, overtaking Yahoo! last year. Also the net Digital Ad Revenue of Facebook in 2011 was around 5.4 per cent of the total US digital Ad revenue. But then those were the days when Facebook was at its prime.
This year the story is different. Facebook’s Q1 and Q2 results were not appeasing. Facebook underperformed eMarketer’s expectations and also questions were raised about the effectiveness of some of the site’s ad products – especially its Premium ad offerings-as some high-profile brands have dropped their efforts on the site. EMarketer had predicted that Facebook would generate revenue of about $2.6 billion this year from online display ads. But owing to the poor performance in Q1 and Q2 EMarketer has lowered that figure to about $2 billion, or 14% of the U.S market. Also Facebook accounts for just 5.8% of net US Digital Ad Revenue.
Google, on the other hand, has used its dominance in search ads which enables them to sell ads across the Web, on YouTube and on mobile devices. Google purchased ad exchange DoubleClick and mobile ad player AdMob which gave a boost to its ads business.
EMarketer has predicted that Google will overtake Facebook this year in selling online display ads. This could be the first time that Google would be the top seller of search ads, mobile ads and display ads. Google is expected to generate display ad revenue of around $2.3 billion this year, up more than 39% from nearly $1.7 billion in 2011. That’s more than 15% of the total U.S. market. Also Google is expected to have 41.3% of the total net US Digital Ad Revenue. Now that’s good news!
Yahoo Inc. and AOL Inc. used to be the leaders in online display ads a few years back. EMarketer expects that Yahoo! will account for 9% of total display ad revenue this year. Microsoft and AOL are expected to account for less than 5% of the total according to the report. When it comes to total net Digital Ad revenue Yahoo! has share of 8.4%, Microsoft has 6% while AOL has around 2.5%.
Microsoft’s revenue share from digital ad has been growing. However it’s Online Services Division, which manages digital advertising (including Bing and MSN), has reported an operating loss for 17 quarters in a row. While the growing share of Microsoft’s search ad revenue is an indication of shifts in the overall search advertising market, it is a less accurate depiction of the company’s overall performance in the digital space.
The net US Digital Ad Revenue share of the top 5 companies (2010 – 2014) is as follows:
Facebook said that it would begin developing a mobile ad network that would allow advertisers to target ads using Facebook data across the web and not just Facebook’s website. Under pressure from Wall Street, Facebook will continue to push hard in advertising on all fronts, so it will be interesting to see how those numbers shift over the coming years.
shinerulz has no positions in the stocks mentioned above. The Motley Fool owns shares of Facebook, Google, and Microsoft and has the following options: long JAN 2014 $20.00 calls on Facebook. Motley Fool newsletter services recommend Facebook and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.