Bloomberg News

Facebook Beats Yahoo as Top U.S. Display-Ad Seller in Study

June 20, 2011

(Updates with Edelman comment in seventh paragraph.)

June 20 (Bloomberg) -- Facebook Inc., the world’s most popular social-networking service, is set to overtake Web portal Yahoo! Inc. this year to seize the biggest share of the U.S. online display-advertising market, a study found.

Palo Alto, California-based Facebook will reap $2.19 billion in display-ad sales this year, for a 17.7 percent share of the U.S. market, topping Yahoo’s 13.1 percent, according to a report today from Internet research firm EMarketer Inc. Spending on display ads is projected to exceed $12 billion this year.

Facebook, with more than half a billion users, has lured advertisers such as Coca-Cola Co., JPMorgan Chase & Co. and Adidas AG. The social network’s display ad revenue more than doubled in each of the past two years, and will surge 81 percent in 2011, EMarketer estimated.

“Facebook’s supreme popularity -- both in terms of numbers of people and amount of time they spend there -- creates a plethora of display ad impressions, mainly for its unique form of banners,” said David Hallerman, an EMarketer analyst, in the report. “That popularity is also boosting what advertisers will pay for its display ads.”

Total global advertising spending on Facebook will reach $4.05 billion this year, more than double the 2010 figure, EMarketer said in a January report.

Google Inc. is projected to increase its U.S. display ad sales by 34 percent this year, and capture 9.3 percent of that market, according to EMarketer’s report today.

Google’s advertising business is more lucrative than Facebook’s because the search engine leader can customize ads based on what users are seeking online, said Benjamin Edelman, an assistant professor at the Harvard Business School in Boston.

Google Franchise

“I continue to think Google has by far the more valuable advertising franchise in terms of having the right context and the right information,” he said. “Google knows exactly what you’ve just searched for.”

Google, based in Mountain View, California, will generate $12.8 billion in U.S. search and display revenue this year, Hallerman said in an interview. Google’s total sales, excluding revenue passed on to partner sites, are expected to reach $27.7 billion this year, according to the average estimate of 29 analysts surveyed by Bloomberg.

Microsoft Corp., which operates the Bing search engine, will capture 4.9 percent of the U.S. display-ad market, in fourth place behind Google, EMarketer said. The Redmond, Washington-based company may have total sales of $69.9 billion this year, according to the average projection of 26 analysts.

Yahoo, based in Sunnyvale, California, may reap total sales, excluding revenue passed on to partner sites, of $4.5 billion, according to average estimate of 27 analysts polled by Bloomberg.

--With assistance from Brian Womack in San Francisco. Editors: Lisa Rapaport, Jillian Ward

To contact the reporter on this story: Zachary Tracer in New York at ztracer1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net


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