In the second quarter of 2012, Facebook Inc (NASDAQ:FB) reported $0 mobile revenue. In the second quarter of 2013, the social network raked in a whopping $656 million in revenue, or 41% of the company’s total advertising revenue. Should Google Inc (NASDAQ:GOOG) be worried? Not at all.
Facebook’s impressive gains
Recent data from eMarketer suggests that, not only is Facebook Inc (NASDAQ:FB) making impressive progress in mobile advertising, but it’s also making huge gains in market share in the mobile ad market. Compared to 2012, when the company first began monetizing mobile, the company’s market share of total mobile Internet ad revenue worldwide is expected to triple in 2013, from 5.35%, to an estimated 15.8%, according to eMarketer’s estimates.
eMarketer asserts that Facebook Inc (NASDAQ:FB)’s growth in mobile ad share is due to the company’s “continued emphasis on mobile monetization, along with its users’ ongoing shift toward mobile devices.”
Meanwhile, Google Inc (NASDAQ:GOOG) gained just under one percentage point in market share during this same period, from 52.36%, to 53.17%. If Facebook Inc (NASDAQ:FB) is gaining market share more quickly than Google, doesn’t this imply that Facebook is eating into Google’s opportunity? Nope.
Not at Google’s expense
There are two key reasons why Google Inc (NASDAQ:GOOG) shouldn’t be worried about Facebook Inc (NASDAQ:FB). One, Facebook’s gain came mostly from internal opportunities.
In the first half of 2012, before Facebook Inc (NASDAQ:FB) monetized mobile, about 57% of the company’s 955 million monthly active users were from mobile. That was a massive opportunity — and Facebook capitalized on it. And, today, even more of Facebook users are mobile: 71% of its 1.15 billion monthly active users, in fact.
Most of Facebook Inc (NASDAQ:FB)’s market share gain, therefore, came from figuring out how to effectively monetize its mobile users, combined with its fast-growing mobile user base. Its gains did not come at Google Inc (NASDAQ:GOOG)’s expense.
Two, Google’s in a different line of business.
Though Google Inc (NASDAQ:GOOG) isn’t gaining much in terms of market share, it is in absolute dollar amounts. Google’s mobile ad revenue between 2012 and eMarketer’s 2013 estimate should increase by about $4.2 billion. eMarketer estimates Facebook Inc (NASDAQ:FB)’s will only increase by about $2.1 billion.
As the overall mobile ad market nearly doubles between 2012 and 2013, the fact that Google Inc (NASDAQ:GOOG) actually gained market share on an already impressive lead shows just how strong of a hold the company has on its market. In fact, to make eMarketer’s estimates true, the company will have to nearly double its 2012 mobile ad revenue.
eMarketer said that Google Inc (NASDAQ:GOOG)’s gain is primarily a result of the company’s success in mobile search and better monetization of YouTube — two lines of business that Facebook Inc (NASDAQ:FB) has very little overlap with.
Google and Facebook are both looking solid
There’s no reason (yet) for Google Inc (NASDAQ:GOOG) to be worried about Facebook Inc (NASDAQ:FB). In fact, eMarketer’s stats provide solid evidence that both companies are doing very well in the mobile market — a solid reason to give both stocks a closer look for consideration in your portfolio.
The article Why Facebook and Google Can Coexist originally appeared on Fool.com.
Fool contributor Daniel Sparks has no position in any stocks mentioned. The Motley Fool recommends Facebook and Google. The Motley Fool owns shares of Facebook and Google.
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