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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."

Image: PCWorld

Meghan Keane

Published 15 October, 2009 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

721 more posts from this author

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Hanne Tuomisto-Inch

Hanne Tuomisto-Inch, Online Communications Director at Banner Corporation

Search marketers are in the best position to run campaigns on Facebook, simply because it's a very similar model to what they know from adwords. There are number of resellers of that have popped up as well, trying to sell to agencies who are not as strong in search, but want to get into targeted display, to run their Facebook targeted campaigns for them.

almost 7 years ago

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Tony Tellijohn

I have a hard time believing that this trend will continue, or that Facebook will actually take a significant chunk of Google's business, until they improve on their ad management & reporting system--which is abysmal at best--and the cost per click prices start to make logical sense.  I've seen the recommended bid price fluctuate significantly without changing any settings on the ads.

almost 7 years ago

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Facebook Management

Great read, from my personal experience i can say that i have noticed a shift in the was that consumers are using their marketing dollars.

almost 7 years ago

Peter Bordes

Peter Bordes, CEO & Founder at oneQube

very good post. not sure how much or the big "when" question. But it is inevitable ththe social channels will errode the Google search engine as marketers figure out how to better leverage social media for marketing.

almost 7 years ago

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Luke, Reach Students

Like Tony I think Facebook has a long way to go in terms of making its ad platform compete with Google. It's often fragile and inaccurate, and many of the reporting tools are pointless.

Advertisers are finding the Google marketplace too expensive, but I've noticed that CPC rates have doubled in the last six months on Facebook, while CTR is getting worse.

Facebook has its uses for brand marketing, and I like it for - usually - cost-effective traffic generation to facebook pages. But no-one is searching on facebook for anything. It's a social space. Google is a search tool. They are two different environments. Google is for shifting products, Facebook is good for engaging in conversation.

almost 7 years ago

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expansion valve

very good post.Facebook has its uses for brand marketing, and I like it for - usually - cost-effective traffic generation to facebook pages.

almost 7 years ago

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