App analytics firm Flurry this summer released a report on mobile Web use that looked damning for search leader Google, a part of Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL), and quite bullish for social network Facebook (NASDAQ:FB). But there's more to the story than the numbers many media outlets chose to focus on, and investors may not want to look at this as a zero-sum game for the search giant and social network.
In a nutshell, the report showed that nearly 90% of our time spent on the mobile Web is spent in apps, the most popular of which are owned by Facebook.
What's more, other research has shown that almost all of the typical tablet user's time is spent in three favorite apps, and for smartphone users, nearly half is spent in just a single app. (For many, the favorite apps in those scenarios are Facebook, Messenger, and Instagram, three Facebook properties that the social network says collectively have more than 1.3 billion mobile users.)
This all appears to be bad news for Google, which of course counts on people browsing to make money. Mobile is a fast-growing area of advertising, with eMarketer estimating that the market will more than double to $51 billion by 2017 as more traditional -- and historically more profitable -- web advertising shrinks. Flurry's report would seem to suggest dim prospects for Google.
Hold the phone ...
But just when things looked darkest came a light: Morgan Stanley last month issued a research note that seemingly dumped Flurry's report onto its head. The bank's analysts proclaimed that mobile Web browsing -- i.e., Google's domain -- actually commands an audience that is both twice as large as those using apps, and also growing faster than the latter.
So who's right?
It's no doubt confusing, but both companies appear to have a case. The two are using different measurements to come to their conclusions. The Flurry report tracked mobile use based on time spent. According to the firm, we spend an average 220 minutes a day on our mobile devices, and 198 minutes of that time are spent inside apps.
That leaves less than a half-hour per day spent browsing the Web on a smartphone or tablet, according to that data.
By that measure, Google would appear to be falling behind the popular apps like Facebook, Messenger, and Instagram -- and falling fast.
Morgan Stanley's research, on the other hand, was measuring traffic based on the number of unique visitors using mobile each day, not the time they were spending in any one particular place. So if a smartphone user opened a browser and searched for something, then spent the next hour on Instagram, mobile browsing and the app would end up with equal credit.
Searching for ad dollars
Both of these methods have their merits. Google doesn't need users to spend vast amounts of time on its properties to make money. Since it relies on search, it collects information efficiently, and it can link users with advertisers quickly. You type in a search term. Google delivers results. And among those results are ads, often at the top. You click. Transaction complete.
It's neat, tidy, and expedient.
There's more to Google's advertising platform, of course. Google offers targeted display ads that allow website owners to earn a share of profits. It also offers retargeting or remarketing ads -- the kind that follow you around like a lost puppy after you visit a website or use an app.
But the bread and butter of Google's $59 billion ad business remains search. And about 20% of that came from search on mobile devices last year, according to a Goldman Sachs analysis. In 2011, mobile search made up just 4.8%, according to eMarketer.
Come and stay a while
Facebook, however, banks on having users spend time in its platform, scrolling through news feeds and photos, and engaging with other users and the content they post. Users may see suggested posts in their news feeds and ads in the rail that Facebook thinks they'd be most interested in based on what they've entered on the site and where else they've visited. It also allows websites and apps to benefit from its data and select ads through its "audience network." And it also gives advertisers the chance to retarget as users move around the web.
It's not as efficient as Google's search platform. But it doesn't have to be. Facebook has built out a platform that people want to use for extended stretches -- and return to over and over again.
While these studies deliver what seem to be confusing -- if not conflicting -- results, there are important takeaways. Mobile computing is growing fast, and just a few companies are positioning themselves to take advantage of that over all others.
There's more than one winner here
So while each report from Flurry and Morgan Stanley initially seemed to spell trouble for one of the two companies, it turns out that each is doing well in a way that is important to its stability and growth in the mobile advertising market that is expected to mushroom from $19 billion in 2014 to $51 billion in 2017.
Both Alphabet and Facebook are in position to capitalize on the mobile megatrend. For investors, it's less helpful to focus on the seeming differences between the reports, and more beneficial to look at the bigger picture.
John-Erik Koslosky owns shares of Alphabet (A shares) and Facebook. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.