The recent launch of Twitter’s Ads API, for instance, gave advertisers significantly more access to users’ streams. eMarketer explains that this is one of the key driving forces for Twitter’s revenue growth.
This week, Facebook Inc (NASDAQ:FB) opened up users’ news feeds to targeted brand posts, allowing brands to provide status updates that appear in targeted users’ feeds. The updates will be hidden from the brand’s page and only show up on the feeds of the targeted users. The move comes after a host of other similar changes introduced during the past 12 months that have continually brought more and more advertisements to users’ news feeds.
The proliferation of increasingly more ads in the user experience, however, isn’t a sustainable way to grow revenue. The challenge for Facebook Inc (NASDAQ:FB) and Twitter will be to balance user experience with revenue sources. As soon as revenue sources begin to impede the user experience, user discontent could cause a long-term problem.
Facebook Inc (NASDAQ:FB) has reached this point, says BTIG Partners media and entertainment analyst Richard Greenfield. He thinks that advertising on the social network is looking more and more like spam, and less like targeted, relevant advertising. Facebook’s new timeline will continue to push ads to the news feed, as the ads on the right side of the news feed are eliminated.
How will Google fit into mobile?
Google Inc (NASDAQ:GOOG)’s a major mobile player. In 2012, it became the largest player in mobile display ads. The company’s onslaught of Android devices gives it a powerful position in mobile marketing. But could the Internet giant lose market share to Facebook and Twitter amid their soaring ad revenues? Probably.
But this doesn’t mean investors should sell Google Inc (NASDAQ:GOOG). The company isn’t priced for the growth rates Facebook and Twitter are experiencing. In other words, investors don’t need the business to earn Facebook-like growth rates for investors to be rewarded.
Investors should, however, keep a close eye on exactly how Google Inc (NASDAQ:GOOG), Facebook Inc (NASDAQ:FB), and Twitter are monetizing their mobile platforms. Their mobile strategies will undoubtedly play a very large role in their wherewithal to compete over the next five years.
So should Google Inc (NASDAQ:GOOG) be worried? Not necessarily, but it should continue to actively pursue successful mobile strategies to remain a provider of competitive solutions for digital advertisers.
The article Twitter’s Ad Revenue Soars. Should Google Be Worried? originally appeared on Fool.com is written by Daniel Sparks.
Fool contributor Daniel Sparks has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Facebook and Google.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
