Google boots Facebook from display ad lead
The social network is looking for innovative new ways to show advertisements to its users.
Google is poised to rake in about 15.4% of display ad profits in 2012 alone, beating Facebook by just 1%. According to The New York Times, these ads that incorporate images or video have become quite popular in the last year alone, with the market growing 21.5% throughout 2012. EMarketer previously determined that Facebook would retain the display advertising lead, but the research firm lowered its forecast on Mark Zuckerberg's unstable company this week.
As PiperJaffray noted Thursday morning, Facebook's main ad product is simple display advertising shown on the side of its platform. With Google closing in on a very important part of the company's profit, Facebook is beginning to come up with other innovative ways to attract businesses and consumers through advertising in its infamous newsfeed.
Facebook "has recently introduced an ad exchange and Sponsored Stories, both of which appear to be performing well," analysts from PiperJaffray stated. "We believe there are two additional opportunities for Facebook that appear to be relatively simple ways for them to further monetize existing page traffic and extend the graph: monetization of search and a more traditional ad network."
Facebook's advertising business will continue to rapidly evolve, and the company's investors can be thankful for that. On Wednesday, the social network saw its shares leap up almost 6.5% on news that Facebook is testing a service to place ads on other mobile applications beyond its own. Shares closed at $23.29 Wednesday, their highest price in seven weeks.
As Facebook revels in its recent good fortune, the company still must sleep with one eye open.
"Google has been pouring resources into its display ad business and courting Madison Avenue," The New York Times reported. "Display ad spending growth will outpace search ad spending growth for the first time this year," according to eMarketer.
Additionally, analysts at Morgan Stanley believe that Google Chrome and Android guard the core advertising businesses -- a job that the company does not take lightly.
Although the advertising race will certainly be close, Google and Facebook are set to champion the market with a combined estimated percentage of 29.8%. Yahoo (YHOO) and Microsoft (MSFT) trail with 9.3% and 4.5%, respectively.
Facebook closed down 3% Thursday to $22.59. Google was nearly unchanged Thursday at $728.12.
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