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MARKETS LIVE BLOG:

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Facebook vs. YouTube: advertising arms race

Justine Underhill
·Reporter

Facebook (FB) is closing in on Google's (GOOGL) YouTube.

The social media site is expected to deliver two-thirds as many video views as YouTube in 2015, according to research firm Ampere Analysis. Facebook and YouTube are nearly tied in terms of audience size, with 1.4 billion and 1.3 billion monthly active users respectively.

Monthly active users for Facebook and YouTube, quarter by quarter (number 1 on the X axis is Q1 2007 and number 32 is Q4 2014).
Monthly active users for Facebook and YouTube, quarter by quarter (number 1 on the X axis is Q1 2007 and number 32 is Q4 2014).

Facebook’s video viewership growth has outpaced that of YouTube. Over the past three quarters YouTube’s video views increased by 50 billion, while Facebook’s video views grew by 230 billion.

Competition will likely lead to increased availability of content as well as surge in the volume of advertisements, says Ampere Analysis, adding that “competition for advertising dollars and viewers risks damaging [YouTube’s] growth prospects."

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Despite Facebook's rapid growth in video, the company has a long way to go to catch up to YouTube's 756 billion quarterly video views, says Yahoo Finance Senior Columnist Michael Santoli.

“Facebook video has really been taking everybody by storm,” he says. “You can't escape the video offering that they have right now, which is much more tailored. YouTube is responding in part by saying, 'Let's try to make things more rationalized in terms of how you find videos, and make them a little more tailored and a little more geared toward ongoing engaging events.' It's a very interesting fight."

Online video grew by 33% in 2014, faster than any other digital category, research firm ZenithOptimedia reported Monday. Zenith predicts that Internet advertisements will to represent 28% of global ad spending by 2017.

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Santoli notes that Facebook's integrated offerings gives the platform monetization advantages over YouTube.

“People spend so much time on Facebook, on their phones especially, and that's exactly where advertisers want to find them," he says. "YouTube was very slow in trying to maximize their ad revenue on their platform, and I do think they're trying to catch up. But because Facebook has that integrated offering, plus all that information about its users, I do think they have the advantage for the moment.”

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