Facebook set to be biggest display advertiser online

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The leading social network, Facebook, is reportedly to become the world’s largest online display advertiser by revenue during 2011, surpassing both Google and Yahoo.

Forecasters are predicting a 95% increase in Facebook’s advertising revenues this year, jumping from $1.8bn to $3.5bn. Meanwhile, Google’s display networks, which include YouTube and DoubleClick, are expected to rise from $2bn to only $2.6 by the end of 2011.

Although this is very impressive growth from Facebook, these figures are based on only image and video advertising shown on a standard web page. Excluded from these statistics is Google’s revenue from search advertising, which produces considerably larger revenues each year ($25.4bn in 2010 and $8.3bn in Q1 2011 alone).

Facebook’s advertising revenues remain a fraction of Google’s search business, however, the social network’s 500m user base is impossible to ignore and and enabled them to lift their revenues rapidly.

A statement from Ian Maude, internet analyst at Ender said “Facebook is changing the dynamics, bringing new advertisers into the market as Google did in 2002 with search,”

It’s not known how long Facebook will retain this kind of advertising growth. With Google now setting display advertising on YouTube and its third party sites as one of its top growth priorities, Facebook is likely to be challenged  heavily as  the ‘top dog’ in online display advertising.

Four’s Opinion: This is not only a revenue victory for Facebook on image based advertising; Facebook has forced rivals like Google to make significant changes to their advertising game.

Google responded recently by creating a new search algorithm called “Social Search” which allows Google Search users to share and recommend search results on their search results. This applies to both paid and natural search listings.

It will be interesting to see how this competition will change the Web and Social networking as we know them.

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