Google vs. Facebook: It’s an epic battle with unpredictable twists and turns. Who would have really assumed Google’s social network, Google+, wouldn’t even make a dent in Facebook’s monstrous reach?
But at the end of the day, Google’s bread and butter has always come from ads. Not drones, not driverless cars, not app sales – ads. Ads on every search result page, email, etc.
Facebook, too, is in the advertising business. And their numbers for 2014 show impressive growth and revenues that absolutely are starting to rival the giant that is Google. Now some are pondering whether Facebook can start beating Google at their own game. Let’s dive into the details and find out.
Mobile Dominance Reigns Supreme
Facebook had a projected $11.9 billion in revenues for 2014, based firmly on ad sales. For Facebook, 2014 really was the year of mobile dominance. In October of 2012, they launched app install ads, which are integrated with the advertising on their mobile platform. With around 200 million Facebook app installations from the Google Play store, this savvy social master has found the exact niche it set out to find: Mobile users access the Facebook app in droves, and as such, Facebook has made a killing in ad sales.
The real sweet spot has been the introduction of ads into users’ news feeds. What was a truly risky move (would people get fed up and leave, or actually click and enjoy the ads?) proved to be their most profitable feature yet. It turns out users don’t mind the ads, because advertisers have learned they need to make them blend with content and feel valuable, or else it’s a wasted buy. In one quarter alone last year, Facebook generated $1.24 billion in mobile ad sales. Google, on the other hand, has not in the been able to master the mobile space in any significant way.
The most telling stat from Google in the first half of 2014 was pay-per-click revenues, which fell 11% from the previous year. This has been a key metric for Google and it shows that at least in some ways, Facebook is on the upswing and Google is struggling to keep their grip.
Winning the Acquisition Game
Facebook’s other major boon is its sizable and whip-smart acquisitions. The most notable brands to join the Facebook family were Instagram and WhatsApp, two immensely popular social destinations. Keep in mind that when Facebook plunked down $730 million for Instagram in 2012, the site just had 15 million users. Fast forward a couple of years and it has well over 150 million, showing massive growth and huge revenues for its parent company.
The other key shift in the last year or so has been the way people interact with their mobile devices. The shift has unequivocally been made in the app arena; people spend far more time accessing apps on their small screens than they do web-based destinations. A report last year from research firm Flurry Analytics stated that “. . . 86% of time spent on mobile devices is spent inside applications, with just 14% left for the mobile web.”
Why is this so critical to Facebook’s battle against Google? Most apps have absolutely no access to the outside digital space; they are essentially islands for users to camp out in and enjoy. Facebook’s app is a perfect example; everything you click on leads to other pages within the social network.
Google, on the other hand, thrives on web links that drive traffic to their search results and related services. With such massive shifts in mobile behavior, Google is struggling to maintain the same level of traffic and eyeballs, diminishing their ad revenue returns. What’s more, Google has simply floundered in their own quest to create apps that people use as feverishly and frequently as Facebook. The result is that Google’s lead is slipping quite drastically.
Experts Predict a Takeover is Imminent
Mahi de Silva, CEO of one of the largest mobile ad platforms on the planet, Opera Mediaworks, is one of the most prominent experts in the field to predict Facebook’s future dominance. His company currently owns more than 17 percent of the global market for mobile display advertising, so he watches such trends religiously. And he works with roughly 95 percent of the world’s top 100 global mobile advertisers. So if anyone can predict reliable trends, it’s De Silva.
On the topic of Facebook coming out on top, De Silva has this to say: “If you look at the display market, they are already number one. Facebook could be number one on a combined basis. If it’s not next year, it might be in 2016. They are the most interesting company to watch right now. . . Just because you are the hundred million pound gorilla in search does not translate into being a really big significant player in display. This has always been a weakness for Google, somewhat muted by the fact that desktop browser advertising, you know, every interaction out there, basically starts with search.”
No matter who wins the war, it will be fought on the small screens; there’s no doubt about it. Google will need to master more adeptly the world of apps, and work harder to claim a bigger piece of the mobile app space. With behemoth competitors like Opera Mediaworks also giving it a run for its money, Google may indeed be counting its last top-dog days. Eventually, every king is dethroned; the question is always when will it really occur.
How do you think the battle for ad supremacy will shake out? And how does this impact your business, if at all?
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