A report released by eMarketer yesterday noted that Facebook's U.S. advertising revenue will total roughly $2.2 billion in 2011, displacing Yahoo! to collect the biggest slice of online display advertising dollars. Facebook’s U.S. advertising revenue will give it a 17.7% share of the market for graphical display ads that appear on websites.
Last year, Facebook had 12.2% share of the U.S. market but the figures underscore the growing clout of the world's No.1 Internet social network. Facebook has seen its valuation soar to roughly $80 billion in recent transactions for its shares on the private markets and some investors anticipate it could have an initial public offering (IPO) as soon as next year. Analyst at eMarketer, notes that while Facebook has grabbed the top ranking, the overall market for display ads, which include banner ads, video ads and Web page sponsorships, is growing robustly enough that it is benefiting numerous companies as both big international brands and small, local businesses increasingly turn to the web to reach consumers. Internet companies such as Yahoo!, Google and Microsoft (MSFT) are competing for those advertising budgets, while new players such as online coupon company Groupon are offering marketers alternatives to traditional online display ads.
Web portal Yahoo!’s online display business in the U.S. is expected to grow by 13.6% this year, but remains behind the overall U.S. display market's growth rate of 24.5%. Google, which generates the vast majority of its revenue from small, often text-only ads that appear alongside its search results, is stepping up efforts to grow its display advertising business. Last week the company announced the acquisition of AdMeld, which makes it easier for Web publishers to sell display ads on their sites. Google's revenue from U.S. display ads will total $1.15 billion in 2011, up 34.4% year-over-year.
In 2012, eMarketer projects that Yahoo! and Google will be neck-and-neck as the No. 2 and No. 3 players in the U.S. display market, with the companies having 12.5% share and 12.3%, respectively. However, Google’s advertising business may have an advantage over Facebook in that the search engine can customize ads based on what users are seeking online. Microsoft, which operates the Bing search engine, will capture 4.9% of the U.S. display-ad market, in fourth place behind Google.
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