Yahoo Finance Facebook vs. Google in web ad battle
Forget Google (GOOGL) vs. Apple (AAPL), the real Silicon Valley giant the folks in Mountain View should be watching is Facebook (FB).
Mark Zuckerberg and company have filed for a patent suggesting they are interested in creating an ad exchange that would marry advertising data with Facebook’s social graph (i.e. all the data they have collected on their users). Given how much information Facebook has on us that’s an extraordinary advantage for an advertiser to have.
Once those two sets of information are combined the ad could take the form of a video on Facebook or an interactive “app” on another partner site.
While a bit complicated the bottom line is this: Google no longer has the market cornered on your personal information and those valuable online ad dollars may one day flow to Facebook instead.
Facebook’s “social graph is head and shoulders above any type of data that’s out there on the consumer that has ever existed,” says Yahoo Finance’s Phil Pearlman. “It is a huge threat to Google over a longer period of time.”
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Pearlman admits Google was the first on the internet advertising scene and they turned it into a “cash cow” for the company. Facebook has since come along to play the role of disrupter while Google instead pumps money into R&D projects like internet balloons (note: Facebook has their own R&D internet drones).
It’s a change Wall Street has noticed too. Facebook’s stock is up 12% in the last six months while Google remains largely unchanged.
“Google has been an incredible cash generating machine,” notes Yahoo Finance’s Aaron Task, “but there are threats and that’s why it’s not just throwing money at the wall and seeing what sticks... they see that the audience is going to mobile, that they’re not as dominant in mobile and that Facebook is an 8,000 pound gorilla in the room.”
In fact, just this week word leaked that Google was considering a pay model for YouTube, a potential revenue stream that has so far subsisted on an ad based model as opposed to a pay wall model.
It remains to be seen whether that will become a reality, but regardless of its fate all is not lost for Larry and Sergei at Google. Pearlman notes “they are being aggressive and not falling into that trap that many successful companies fall into where they rest on their laurels - they are attacking other markets. I think they do have potential as well.”
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