Why Facebook and Google Can Coexist

In the second quarter of 2012, Facebook (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 (NASDAQ: GOOGL  ) be worried? Not at all.

Facebook's impressive gains
Recent data from eMarketer suggests that, not only is Facebook 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.


Source: Data retrieved from eMarketer. 2013 based on eMarketer forward-looking estimates.

eMarketer asserts that Facebook'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 gained just under one percentage point in market share during this same period, from 52.36%, to 53.17%. If Facebook 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 shouldn't be worried about Facebook. One, Facebook's gain came mostly from internal opportunities.

In the first half of 2012, before Facebook 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'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's expense.

Two, Google's in a different line of business.

Though Google 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'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 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'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 has very little overlap with.

Google and Facebook are both looking solid
There's no reason (yet) for Google to be worried about Facebook. 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.

Want to Learn More About the Dynamics Driving the Future of Tech?
The tech world has been thrown into chaos as the biggest titans invade one another's turf. At stake is the future of a trillion-dollar revolution: mobile. To find out which of these giants is set to dominate the next decade, we've created a free report called "Who Will Win the War Between the 5 Biggest Tech Stocks?" Inside, you'll find out which companies are set to dominate and give in-the-know investors an edge. To grab a copy of this report, simply click here -- it's free!


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2615898, ~/Articles/ArticleHandler.aspx, 12/19/2014 1:33:27 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement