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Facebook Zooms to No. 2 in Mobile Ad Revenue, Behind Google

Facebook Zooms to No. 2 in Mobile Ad Revenue, Behind Google
December 18, 2012 9:43AM

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Before Facebook's Q3 earnings call, most researchers and analysts expected U.S. mobile ad revenues of $45 million to $100 million, according to eMarketer. While Facebook's total ad revenues were, for the most part, unsurprising, the share of revenues attributed to mobile advertising -- a projected $339 million for the year -- was far from it.

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As it strives to become even more profitable and boost its stock price, Facebook is not only having success with its own fledgling mobile advertising business but boosting the overall mobile marketing industry, a report Monday suggested. The social media giant is now No. 2 in net mobile ad revenue in the United States, according to research firm eMarketer.

Search giant Google, creator of the Android mobile operating system, is No. 1, with a projected $2.1 billion in mobile ad revenue this year, up from $750 million last year. Facebook's revenue this year is projected at $339 million, up from zero last year. Pandora follows at $224 million this year, and Twitter with $143 million.

Apple's iAds agency is also making steady progress with $123 million, up from $38 million last year.

In the Driver's Seat

But Facebook is seen in the report as a driving force this year, which is projected to see a 180 percent increase in ad spending, including display banners, rich media and video, search and messaging-based ads on phones and tablets.

"The social networking giant offered no mobile ad opportunities at the beginning of 2012 but grew its mobile business at an astonishing -- and unexpected -- rate," eMarketer said.

"Before Facebook's Q3 earnings call, most researchers and analysts expected U.S. mobile ad revenues of roughly $45 [million] to $100 million, according to figures examined by eMarketer. While the company's total ad revenues were, for the most part, unsurprising, the share of revenues attributed to mobile advertising was far from it."

eMarketer bases its data on input from research firms, investment banks and other sources on ad revenues, impressions, pricing and other factors. Looking ahead, it expects mobile ad spending to soar to $7.19 billion (up 77 percent) next year, $11.14 billion (up 55 percent) the year after, $15.82 billion (42 percent) in 2015 and $20.89 billion (32 percent) in 2016.

By contrast, a February report by Strategy Analytics projected that global television ad revenue in 2012 is expected to grow just 5 percent, to $188.5 billion.

eMarketing also said Google had a better than expected third quarter, and now, unsurprisingly, controls more than 93 percent of the $1.99 billion U.S. mobile search ad market, and 56 percent of the overall U.S. mobile advertising market.

Analysts see the small screen as a mixed bag for advertisers.

Location, Location, Location

"Right now, ads that are placed in videos -- like YouTube -- are watched and get better attention than TV in many cases," said technology consultant Rob Enderle of the Enderle Group.

"But other types of ads haven't been as successful. The small screen is problematic, you can't share space well and if you do a static ad folks generally won't read it. "

More promising, he said, are location-based proximity ads that offer people deals based on where they are and what they are already doing -- for example, looking for a good place to eat after a movie.

"As people use their phones more and more to check deals and hunt for discounts, related activity will have more value," he told us. "But while Google does have content and related ads that have good conversion, Facebook has had horrid conversion on the large screen and, as far as I can tell, far worse in the small screen."

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