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Wired's argument this spring that Facebook is the next Google may have legs. According to Silicon Alley Insider, Facebook is skimming ad dollars from Google's search business.
SAI's Internet Analyst spoke with an ad agency that has noticed brands quietly moving ad dollars from Google search to Facebook's new self-serve display ads. If this becomes a trend, it could be huge for Facebook.
According to SAI:
"A small percent of the search agency's clients (but "more than a handful") are now using some of their search budgets on Facebook's self-serve display ads. This is money that would otherwise have gone to Google and Yahoo."
Google itself has recently gotten into the display ad game with the DoubleClick Ad Exchange, which could head some of its ad loss off at the pass, but there are specifics about Facebook self-serve ads that make it very appealing to brands.
For starters, the information voluntarily shared on Facebook provides advertisers with impressively targeted advertising. SAI also says that Facebook's performance and ROI metrics are rivalling and at times even exceeding search.
Facebook has been hard at work trying to trun its popularity into an effective advertising model. And there are a few indicators that those efforts are starting to pay off.
For starters, Facebook is increasing its interaction with users. The social network's marketshare is up 194% since last year, according to The Internet Analyst. In comparison, MySpace has lost 55% of its marketshare over the last year.
But beyond the amount of people using Facebook versus MySpace, Facebook users are also more engaged. Average time spent on MySpace is down 12% since last year, while time spent on Facebook is up 23%.
New strategic partnerships are also helping Facebook's ad business. Facebook Connect is helping the social net insert itself in more of the activities that people partake in online. It's also growing the
And if the Facebook/Google comparison needs any steam, Facebook is also gaining in the search market. The site may be a small player in terms of the overall search market, but Facebook recorded the most growth in search in the last quarter — its 384 million searches represented a gain of 19%.
Facebook has mainly been working on increasing its stickiness with users, because the more people use the network and related services, the more valuable its advertising becomes.
According to Silicon Alley Insider, if the early success continues: "self-serve display ads could do for Facebook what AdWords did for Google."