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Facebook capture of mobile ad disturbs Google

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Is Facebook a Daunting Threat to Google?

Facebook Inc (NASDAQ: FB) and Google Inc. (NASDAQ: GOOG, GOOGL) lead in ad revenue. Google is way ahead of Facebook; but the world’s number social network has been making impressive progress in the mobile space. The search engine giant this year landed ad revenue of $14.3 billion in the second quarter compared to Facebook’s $2.68 billion. Ad revenue covers 90% of the companies’ overall revenue.

Facebook seems to have captured the mobile scene as Google remains struggling.  Facebook’s mobile ads hit 60% of its total ad revenues while Google reaches only 12%.   Chances are the social networking company is becoming the world king of mobile ads in two to three years.

Facebook mobile ad kit

Facebook has pinched a few plays from Google, such as the self-service tool, a clear knock-off from Google AdWords. In October 2012, Facebook also launched Mobile app-install ads. App-installs drive more traffic to Facebook ads and lure users to download them. Since the introduction, Facebook has had more than 350 million apps downloaded. With $2 to $4 paid per download, Facebook is reaping big, according to Macquarie Equities Research. Facebook has also added lots of tools to drive traffic too mobile ads such as Use App, Watch Video, Listen Now, Shop Now, Play Game and Open Link.

The “cross-platform platform” mobile development tool announced by Facebook during this year’s f8 developer conference, among others, is set to be mobile developer friendly as it cuts across Android, iOS, and Windows devices. This is bound to lure many mobile developers. Facebook is additionally offering the mega SDK (software developer kit) to mobile app developers that will be created around app marketing services.

Google’s Key Vantage Points

There is no gainsaying Google is facing a tight competition from Facebook as far as monetizing ads is concerned, especially mobile ads. However, Facebook can’t touch the paid search Google’s money pot, and has no product to compete with that.

For now marketers still prefer Google to Facebook as a digital marketing platform. Forrester Research’s last year survey confirmed that people still prefer search marketing, which is Google main forte.

Forrester Researcher’s Nate Elliot, in an open letter, questioned Facebook chief executive Mark Zuckerberg for failing marketers. Only 16% of Facebook users ever see a brand post. Worse, only 15% of the ads ever hit the target of audience. In short, Facebook reaps big but hardly get marketers reaching their intended target audience.

This is not Facebook’s fault since they face the dilemma of satisfying the marketers and making itself unpopular to users by serving unsolicited ads or service less ads to retain a happier traffic.

Google however has a free way here as their ads responds to certain keywords users place in their search queries, making them more helpful to users.

Google has faced a decline in CPC due to two main reasons. One: more clicks come form emerging markets outside North America and secondly, the growth of mobile ads pulls down the CPC, given Mobile CPC is typically lower than desktop CPC.

Bottom line

Facebook is rapidly rising as one of the most dominant players in online ad scene, but this is in no way impacting negatively on Google’s growth. With the two giants running roughly distinctive paths in a fast growing market, there is sufficient space for co-existence without a cause of brawl.

Ad Rates Battle: Google to stabilise its CPC

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Declining ad rates leaves Google exposed to Facebook blitz

When Google Inc. (NASDAQ: GOOG) released results of its second quarter ending June, the company generally displayed a solid quarter both on the basis of earnings and operating cash flow. The company had a remarkable 22% revenue growth. Even so, the search engine giant could not help but notice a disturbing trend – a continuing quarterly decline of its ad rate otherwise referred to cost-per-click (CPC).

Cost-per click is the price advertisers pay every time potential customer clicks on an advert. Google’s ad rate has taken a downturn over the past few years, and this decline has been linked to pricing pressure from other digital marketing firms such as Facebook Inc. (NASDAQ: FB), which is getting it right in mobile advertising.

While the search engine multinational still thrive with its businesses, it cannot ignore this negative trend that threatens its reign as the digital marketing master. The company has therefore hatched a plan to restore stability on its ad rates.

Comparing Google and Facebook on Ad Rates

In digital advertising, conversion rate is the key to success. Advertisers are happy if a good number of people who click on their ads end up buying the product. So ad rate should be directly proportional to the advertisement conversion rate.

The plan to stop declining cost-per-click must start with proper analysis of the market data. However, since Google gives its customers a free hand to customize their adverts, the company needs to provide them with improved tools. If the results are better, then customers will not even notice the higher fees.

In order to improve the conversion rate, the Google needs to tailor its adverts for specific audience. Actually this has been working for Facebook, which posted impressive revenue growth. The social media giant uses its ever increasing user data to customize ads visible on users’ pages.

Last quarter the Mark Zuckerberg’s firm garnered about $3 billion in revenue. While the revenue growth was driven by increased sale of ads, we cannot ignore its well tailored ads that attracted advertisers who were willing to pay without second thoughts.

Shopping Campaigns: Google’s response to Facebook threat

Already Google has AdWords and merchant accounts which its clients use to monitor different performance metrics of their posted advertisement. But if you compare these tools with Facebook’s, Google clients, to some extent, have limited options. This is why Google is planning to introduce a more comprehensive analytic suite for its customers.

Google has introduced Shopping Campaigns for Product Listing Ads (PLA) to help its advertisers to easily promote their products and connect with their consumers online. The new service rationalizes items management, has advanced reporting and provides comprehensive insights. According to Google, the new system will enable them which strategies are working so that they can adjust their efforts effectively.

Conclusion

It is undoubtedly true that Google’s ads business dwarfs Facebook’s, but the latter is quickly leaving the minion zone and this is a reason enough for the online search king to worry about. The good this is Google always learn from mistakes and it cannot afford to ignore the threat posed by the social media network. So it has already begun to explore ways to improve its worrisome ad rates. However, the game is on until the search engine giant does something about its floundering mobile ad business.

Mobile Ads – Google Struggle in Facebook’s Goldmine

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Mobile Ads business proves to be hard nut to crack

mobile ads, Google, FacebookGoogle Inc. (NASDAQ:GOOGL) is finding mobile advertising a little bit difficult to crack. Possessing the first mover advantage, the search engine giant dominates internet advertising. It has been an online advertiser since the year 2000. However, it trails Facebook (NASDAQ:FB) in mobile ads. Last year, its mobile ad revenue stood at $3 billion, trolled by the social media platform’s $3.28 billion. In the quarter ending June, Google reported an astounding 22% revenue growth. Nevertheless, the results revealed that its cost-per click is declining courtesy increased competition, particularly from Facebook.

The Mobile ad Market

In the last quarter, the number of Facebook’s ad impressions on mobile devices surpassed that on the desktop. According to data from eMarketer, the social media’s mobile display ad revenue grew by 50.5% year-over –year (YoY) in the US, dwarfing Google’s 33.3%.

Facebook

Facebook has refined its strategies towards bolstering its users’ interaction with its ads, be it mobile or internet. But mobile ads seem to be its goldmine, since these ads now account for 59% of Facebook’s total ad revenues. Facebook had earlier been tipped to lead mobile advertising. In fact, after its IPO, its share price tumbled as a result of poor monetization of its mobile market. After getting its mojo back, the social media network is proving to be a pain in the ass for the world’s leading search engine and e-advertising giant. In 2012, Facebook’s accumulated display ad revenue was $2.18 billion, trailing Google’s $2.25 billion. After overtaking the search engine company last year, Facebook is continuing to open the gap. Its mobile app platform is now also the leader in in-app advertising. eMarketer revised its earlier Facebook’s digital display revenue forecast of $3.35 billion, and it now estimates that the social network will collect $4.8 billion to Google’s $4.0 billion in 2014.

Google

Google’s ad prices have been declining for the past two years. The 2014’s second quarter saw the cost per click drop by 6% compared to 2013’s second quarter.  Cost per click is the price that advertisers pay whenever somebody clicks on an ad. It is however difficult to tell how much earned from mobile ads, given that it does not separate it from desktop ad revenue. But the truth is, Google is yet to gain traction in mobile ad market as Facebook has. In 2013 Google’s mobile ad market dropped from 49.8% it held in 2012 to 41.5%. Facebook on the other hand gained 9% over the same period to take its market share to 16%. Isn’t it obvious that the social media giant is eating into Google’s market share? Google is a much diversified company than Facebook. Even in ad business, it collects revenues from search ads, YouTube, and other partner sites. YouTube ads relatively earn more money. In 2013 alone, the company collected a net of $2 billion from these ads, which was 5.6% of its total net ad income that year.

Conclusion

Digital marketing is quickly shifting from PCs to mobile devices, with smartphones leading the pack. So while Google continues to experience growth, it needs to find a way to crack the mobile ad market which is driving Facebook’s phenomenal growth.