Google set to displace Facebook in display ads

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16 Feb 2012
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SAN FRANCISCO: Facebook Inc will lose its lead to Google Inc in US display-ad revenue next year as the social- networking service's advertising growth slows, according to research firm EMarketer Inc.

Google will grab 19.8 per cent of the market in 2013, generating $3.68 billion, while Facebook will attract 17.7 per cent, or $3.29 billion, New York-based EMarketer estimates. Facebook had taken the lead from Yahoo! Inc last year, and it should maintain its edge through 2012 in the market, which includes ads with pictures, videos and other visual elements.

Facebook and Google, both relative latecomers to the display-ad market, have shoved aside other rivals to become the industry's main contenders. Facebook took the lead by peppering its burgeoning social networking with small ads.

Google, meanwhile, expanded from its origins in text-based search-engine links. It now sells a variety of graphical advertising on websites, mobile phones and YouTube clips.

Facebook, with 845 million users, needs to do more to persuade big brands to spend money on marketing, rather than just having them set up free company pages on the social network, said Debra Aho Williamson, an analyst with EMarketer.

"It really comes down to brand advertisers," she said. "They just need to do a better job of convincing the big advertisers that ads are effective and that they perform."

IPO filing
Facebook, which filed for an initial public offering this month, is coping with slowing revenue growth. Sales rose 55 per cent to $1.13 billion in the fourth quarter from a year earlier, after more than doubling in the previous three quarters, according to a regulatory filing. EMarketer expects Facebook to reach $6.1 billion in total revenue this year, up from $3.71 billion in 2011.

Facebook filed this month to raise $5 billion in the largest initial public offering of an Internet stock. The Menlo Park, California-based company is considering a valuation of between $75 billion and $100 billion, people familiar with the matter have said.

Facebook and Google will tighten their control over the industry in the coming years, EMarketer said. Yahoo will account for 7.5 per cent of the US display market in 2014, down from almost 11 per cent last year. AOL Inc will drop to 3.7 per cent from 4.3 per cent. Google will have 21.7 per cent in 2014, with 17.1 per cent going to Facebook.

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