Facebook Inc (FB): Twitter’s Ad Revenue Soars. Should Google Inc (GOOG) Be Worried?

This past week, eMarketer increased its estimates for Twitter’s ad revenue based on greater-than-expected demand for the platform’s mobile ads. The news isn’t entirely unexpected; social advertising has delivered a streak of upside surprises. As social advertising continues to gain traction, should Google Inc (NASDAQ:GOOG) be worried about losing advertising dollars?

Social advertising is gaining on Google
eMarketer’s revised estimates for Twitter’s ad revenues were substantially higher than its original expectations. The market research company had initially forecast 2013 and 2014 ad revenues to come at $545 million and $808 million, respectively. Now it has pushed up those estimates to $583 million and $950 million.

Adding perspective, that’s an expectation for a 102% year-over-year change in 2013 and a 63% change in 2014. Some anonymous insiders even expect Twitter’s revenue to top $1 billion in 2014. Where’s this growth coming from? eMarketer’s report cites these four areas:

Growing adaption of mobile devices.

More interest on spending money on mobile advertisements on Twitter.

Improving audience reach on Twitter.

The launch of Twitter’s Ads API.

Facebook Inc (NASDAQ:FB) and Twitter, Inc. shine in mobile
Mobile is definitely the name of the game in digital advertising these days. According to a Pew Research Center study, mobile ad revenues increased 80% in 2012, year over year. The explosion of mobile browsing is changing everything.

Facebook Inc (NASDAQ:FB)

Facebook Inc (NASDAQ:FB) declared itself a mobile company in its fourth-quarter results, when the company’s mobile monthly active users, or MAUs, exceeded 50% of the company’s total MAUs. Furthermore, its mobile revenue accounted for 23% of total revenue, up from 14% in the prior quarter.

eMarketer estimates 53% of Twitter’s ad revenues to come from mobile this year, a drastic increase from virtually zero mobile ad revenue in 2011.

While Google Inc (NASDAQ:GOOG) is definitely poised to perform well in the mobile market, will Twitter and Facebook, whose businesses are tied more closely to mobile, see outsized benefits? If recent history is any indication of the future, it is a feasible prospect.

Twitter’s 107% year-over-year increase in revenue in 2012 and Facebook’s 37% increase are mainly due to the explosion of mobile advertising on these social platforms. Though there is definitely some cannibalization of desktop advertising’s share, it’s likely that a great amount of incremental growth is due to mobile adoption, since the platforms are extremely mobile friendly.

Spam or relevant?
Much of the astounding growth of social digital advertising on Facebook Inc (NASDAQ:FB) and Twitter platforms is due to new platform-specific ad solutions that allow advertisers to run targeted campaigns that weren’t possible in the past.