It may not feel like it's time to celebrate to fans of Facebook (FB 2.11%) after a fairly dismal week. After kicking off the month of July with a share price over $67, Facebook has steadily declined, shaving about 7% off its value. What gives? There was no impetus for the sell-off, just the usual fluctuations that Fools have come to expect in the near-term, particularly for tech-related stocks.
But what an opportunity Facebook's minor sell-off represents for investors who haven't gotten on board yet, or those who want to add to an existing Facebook position at bargain prices. According to new research from eMarketer, media ad spending will continue to increase, led by, and this is the good part for Facebook and Google (GOOGL 2.01%) (GOOG 2.27%) aficionados, digital advertising. The two digital advertising giants are preparing to clean up as more and more marketers shift their dollars online.
The specs
Thanks, at least in part to the World Cup and Winter Olympics earlier this year, total advertising across the globe should exceed $545 billion in 2014. Of course, that includes TV, radio, and print ads too, but it's the explosive growth in digital ad spend that should have Facebook and Google investors salivating.
Of that $545 billion marketing departments are expected to shell out this year, over one-quarter of it will be spent on digital ads, to the tune of $140.15 billion, so says eMarketer. That's an awfully big advertising pie, and that kind of growth is likely to continue as more and more companies look to digital to reach consumers.
Facebook's shift to all things mobile has already begun to pay off, and should really ramp up over the next several months, and years. Nearly 60% of Facebook's $2.27 billion in ad revenue last quarter came from its mobile efforts. And with a billion of its total 1.28 billion monthly average users (MAUs) accessing Facebook on the go, it's safe to say it has successfully made the transition to mobile.
Mobile will be a key driver of growth going forward for Facebook. According to the data from eMarketer, 2014 will see a nearly 85% increase in mobile ad spend, up to a whopping $32.71 billion. And here's where things get interesting, Facebook and Google combined will account for two-thirds of all marketing dollars on mobile devices.
What does it mean for Facebook?
Not surprisingly, Google dominates the mobile digital ad marketplace, and is expected to garner 46.8% of the $32.71 billion eMarketer says marketers will spend this year. Though Facebook will only account for 21.7% of mobile ad spending in 2014, that's four times the market share it commanded just two years ago.
The shift from feature phones to smartphones in emerging markets will also play a part in Facebook's growth going forward. However, in the immediate future, established regions including North America, Western Europe, and Asia will drive digital ad spending, particularly mobile advertising. And that's just fine by Facebook, with over 80% of its 1.28 billion MAUs residing outside the U.S. and Canada.
Final Foolish thoughts
Google will continue to lead the digital advertising push in the foreseeable future, but despite the unwarranted pressure recently on its stock price, Facebook is ideally positioned to continue eating away at the search giant's market share. And if eMarketer's research pans out, Facebook will continue to gain ad share in what is going to become a considerably larger market.
Now, add in Facebook's multiple strategic acquisitions and initiatives of late: including taking Internet access to the masses worldwide using drones, targeting small business owners, video ads, monetization of Instagram, and the WhatsApp and Oculus acquisitions, to name but a few. Yes, the future just keeps looking better and better for Facebook, and those investors able to look beyond next week.
