Until 2012, Advertisers were using the Google Search and AdSense / DoubleClick Display Advertising Paltforms. However, with the entry of Facebook, Google's Display Ad one of the best in the industry suddenly had big competitor which offered unmatched metrics and analytics, a big reason for them to shift base to Facebook.
Google is the leader in search, Facebook is the leader in display. But as we’ve said in the past, we like the structural advantage of the search market to drive pricing and volume growth a lot more than the display market. Facebook is growing at 25%, and Google is growing at ~21%, despite the fact that Google is 10x the size. Neither Yhoo, Nor Microsoft nor Amazon could compete Google in Search in the last 6 years.
Facebook has dominant structural position – it’s in a display market that’s in secular growth, it’s a category leader in a relatively concentrated display category, it has unparalleled reach, and has many opportunities for higher monetization over the long term.
Facebook’s unparalleled reach and engagement will continue to take share in the overall growing display market, and we like their longer optionality for stronger, long term monetization. The biggest risk in this story is slowing user growth and engagement. That's why it's going to be very important to watch these user trends and these engagement trends very closely, on desktop and mobile.
Facebook continues experimenting with and working to develop methods to improve monetization. Since June 6th, they've announced a series of initiatives which we think are positive signs that the company cares about monetization. They've now split up desktop and mobile display advertising buying separately, which advertisers wanted. They are also now allowing cookies and they're developing an ad exchange.