Google Vs Facebook: Competition Heats Up In Online Video Advertising

  • Facebook has gained significant ground in online video advertising.
  • Facebook's share of global ad revenue has increased and is second only to Google's.
  • Google faces increased competition from Facebook, especially in digital video advertising.

A few years ago, a Facebook Google comparison would probably seem outlandish, but with Facebook’s rise as a social media giant, the comparison has become inevitable today. Leave aside Google plus, and the two companies might not be involved in exactly identical businesses. Google (NASDAQ:GOOG) of course, is best known as a search engine, and Facebook (NASDAQ:FB), as the social media juggernaut that it is. However, being heavily dependent on advertising revenue, they do compete for ad spends by advertisers. While there’s still a reasonably large gap between the two companies on most counts, it does appear as if Facebook is catching up, slowly, but surely.

Google vs Facebook : Facebook Gains In Online Video Advertising

With Facebook and Yahoo (NASDAQ:YHOO) making some key acquisitions, competition in online video advertising has stepped up a notch. Back to our primary discussion, in the year gone by, Facebook has made some headway in online video advertising, an area which used to be Google’s stronghold with its hugely popular YouTube platform.

Now for some numbers, here’s some data from ComScore’s online video rankings for desktops usage in the US. For those who are wondering why there’s no talk of mobile, which drives a bigger share of traffic each day, we’ll come to that in a bit.

Total Unique Viewers (millions) Dec-13 Dec-14 YoY Growth
Total Audience 188.2 195.7 4%
Google Sites 159.1 163.8 3%
Facebook 79.1 96.7 22%

Source: ComScore Online Video Rankings

The US is an important market for the two companies because advertising rates in this region are typically much higher than those in other geographies.

In the US, on desktops, Facebook still has way lesser unique viewers than Google. However, Facebook’s video viewership has grown at a much faster clip when compared to the total audience, as well as Google’s audience. Some part of Facebook’s gains were driven by auto-play videos, which helped Facebook beat YouTube in terms of desktop video views for the first time in Aug 2014.

Be that as it may, it still contributes to Facebook’s revenue growth. Further, Facebook is undoubtedly gaining share in the online video advertising space.

According to a recent report by WSJ, Facebook accounted for 35% of Super Bowl ad viewing online, while YouTube grabbed most of the views off Facebook. As per the report, Facebook has made handsome gains compared to the year ago when it was “essentially a non-factor”, while YouTube grabbed nearly all online views.

What’s more, this is not an isolated case. Some advertisement videos have seen Facebook views exceed YouTube’s, like Budweiser’s “Lost Dog” ad. It isn’t clear if Budweiser ran a paid campaign on either of the sites. However, at this point, Facebook will just be happy to see videos going viral and users engaging with more and more video content, be it monetized or otherwise.

Let’s be clear, YouTube still dominates the space. However, it’s clear that Facebook is gaining on Google’s mammoth online video platform. For those interested, there’s also a claim that Facebook is grabbing video creators from YouTube.

Facebook vs Google Daily Video Viewership

In the con-call following the Facebook earnings release for Q4 2014, CEO Mark Zuckerberg announced that the social media giant saw more than 3 billion video views per day, on average. This number has shot up from 1 billion video views a day in June 2014.

Sadly, the last comparable number of 4 billion views per day on YouTube dates back to Jan 2012. The table shows YouTube’s journey from 1 to 4 billion views per day.

Oct-09 May-10 May-11 Jan-12
YouTube Video Views Per Day (billions) 1 2 3 4
Absolute Growth 100% 50% 33%

Assuming growth rates ranging from a constant 33% every year, to a 25% growth in 2013 and a 20% growth in 2014, YouTube’s daily video views could range from 6 to 6.7 billion a day.

Google vs Facebook Mobile Video Viewership

According to Facebook, about 65% of its video views occur on mobile devices. That compares with YouTube’s 50% mobile viewership percentage.

Facebook has an 85%+ mobile adoption among its Monthly Active Users (MAUs), a disticnt advantage in the ongoing global transition to mobile platforms.

Facebook vs Google Share of Global ad-spends

Facebook & Google Global Ad revenue share

eMarketer projects that Facebook’s global ad revenue share might have expanded by 2% in 2014 to touch 7.75%. In contrast, the firm expects Google’s global ad revenue share to have contracted by 0.45%.

Of course, it goes without saying that Google still towers head and shoulders above the rest of the competition, and Facebook is a distant second. The third US based entity on that list is separated from Facebook by two Chinese giants, and is a fair distance away from Facebook as well.

Facebook’s acquisition of Liverail could turn out to be another driver of its growth in revenue and market share, given that Liverail is a top video ad buying platform, and has ranked in the top 3 on ComScore's list consistently.

Facebook Acquisition Liverail Rank In Online Video Ad Properties

Google vs Facebook : Closing Thoughts

Facebook’s rise in the online video advertising space has been meteoric and there’s no disputing that. Being the fastest growing advertising format, online video advertising is likely to attract an increasing amount of ad-spends, making Facebook’s growth all the more valuable.

As we said earlier, as things stand, Google very much rules the roost, and by a huge margin. However, given Facebook’s progress in the advertising space, Google won’t take the social media giant lightly. You can see our Google stock analysis and Facebook stock analysis to know more about these tech giants' fundamentals, like valuations, growth rates, profitability, free cash flows and more.

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Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. The author may not be a certified/registered investment advisor, and the opinions expressed should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions. Neither Amigobulls, nor the author have any business relationship with any of the companies covered in this post.

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