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What's Good For Facebook and Pandora Is Bad for Google and Apple

By Evan Niu, CFA - Apr 10, 2013 at 10:00PM

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There's been a shift in the mobile ad market, with newer publishers beating out networks. That change is benefitting the likes of Facebook and Pandora at the expense of Google and Apple.

In the age of mobile ads, the heavyweights are losing the upper hand. According to a recent report from IDC, the mobile display ad market is being taken over by publishers like Facebook (FB 2.96%), Pandora Media (P), and Twitter. That's good news for those companies, and bad news for incumbent ad networks from Google (GOOGL 1.17%), Millennial Media (NYSE: MM), and Apple (AAPL 1.91%).

Overall mobile ad spending continues to rise, jumping 88% in 2012 to $4.5 billion. IDC pegs Facebook as the top mobile display ad seller with $234 million in gross revenue. Pandora follows that with $229 million, with Twitter ranking third at $117 million.

Facebook had zero mobile ad sales in 2011, but made a big push into mobile ads in 2012 starting with Sponsored Stories. Anyone paying attention to the social network's enormous IPO is likely well aware of the criticisms at the time that Facebook lacked a mobile monetization strategy. That's changed by now, and Mark Zuckerberg is on a mission to dispel the myth that Facebook can't navigate the mobile transition.

Pandora's free ad-supported service has been around a long time, but only recently did the online radio streamer go public. However, Pandora's costs scale up alongside revenue, making it much more difficult for it to put up a profit compared to the social network.

Within the ad network market, Google remains top dog with an estimated $243 million in revenue last year. Millennial Media, who also went public in 2012, overtook Apple for second place. Millennial generated $151 million in sales, topping Apple's $125 million.

Google naturally still owns the mobile search ad market, with $2.2 billion in revenue and a 79% market share, but none of the aforementioned rivals meaningfully competes in search.

However, Apple doesn't care too much about its iAd network relative to its core device business. The Mac maker made it clear from the beginning that iAd's whole purpose was to help developers offer free apps by providing an alternative method of monetization.

The new guys on the mobile ad block are chipping away at the incumbent heavyweights.

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Apple Inc. Stock Quote
Apple Inc.
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Alphabet Inc. Stock Quote
Alphabet Inc.
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Meta Platforms, Inc. Stock Quote
Meta Platforms, Inc.
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Pandora Media, Inc. Stock Quote
Pandora Media, Inc.

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