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Facebook Inc. (FB) Proves Its Worth to Advertisers in Race With Google Inc. (GOOG)

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Advertising on Facebook Inc. (NASDAQ:FB) provides a 22% boost to ROI — at least it did for 22 recent campaigns covering a total of 70 million consumers, says Brad Smallwood, head of measurement and insights at Facebook. This news is yet another impressive metric to add to Facebook’s laundry list of success with advertisers in its first 10 months as a public company.

Facebook Inc. (FB)

Facebook’s quest for ad dollars
Right out of the IPO gate, analysts had big expectations for Facebook to follow through on its massive membership base with ad revenue. The company undoubtedly delivered — especially in the mobile arena.

Though Google Inc. (NASDAQ:GOOG) definitely did take the mobile ad crown in 2012 with 54.5% of all mobile ad spending in the U.S., Facebook’s nascent success in mobile is mind-boggling. It was only in June 2012 that the company introduced its first mobile-only ad feature, yet mobile ads accounted for almost 25% of Facebook’s $1.33 billion in fourth-quarter 2012 ad revenues, up from virtually zero earlier in the year.

Facebook Inc. (NASDAQ:FB)’s progress in mobile is a welcoming sign for the company’s investors. Going forward, success in the mobile market is absolutely essential; eMarketer projects annual mobile ad spending to triple by 2016, from $4 billion today to $12 billion.

Adding even more perspective, eMarketer estimates that 64% of all 2012 ad spending went to the five largest companies in the digital ad market, of which Facebook is the third largest, following Google and then Yahoo! .


Source: eMarketer.

Notably, however, Facebook Inc. (NASDAQ:FB) grew its market share at a faster rate in 2012 than any of the other five companies, growing year-over-year ad spending by 24% compared to Google’s 20% growth.

Competition will intensify
The competition among the five largest companies in the digital ad market — especially Google, Yahoo!, and Facebook — will undoubtedly grow even more heated as the year goes on.

Each of these ad juggernauts is ramping up its efforts in different ways. Yahoo!’s acquisition of Jybe yesterday was yet another sign of the company’s data- and social-driven approach to becoming a better curator of information. The acquisition is the second announced under recently appointed CEO Marissa Mayer. Jybe is a personalized recommendation company that provides recommendations based on a user’s social contacts. The acquisition is in line with the company’s acquisition of Stamped, a mobile startup that specialized in social recommendations, just five months ago.

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