Is Facebook really worth +$100 billion?
That was Facebook’s market capitalization, based on where the stock is priced for its IPO on Friday, May 18.
I’m no investment analyst, but here at WordStream, we are experts on online advertising. Facebook’s valuation of $100 billion puts it at half the worth of Google. Since both Google and Facebook generate most of their revenue through advertising (advertising accounts for 96% of Google’s revenue vs. 86% of Facebook’s), we can definitely weigh in on the worth question from an advertising perspective.
So we decided to do a comparative analysis of the world’s largest online display advertising networks: Facebook vs. the Google Display Network.
To be perfectly clear, we’re not comparing Google vs. Facebook as companies per se. Google is a search engine, and Facebook is a social network. This is a specific comparison of the display advertising capabilities of Facebook against only the display advertising component of Google’s business (The Google Display Network), which makes up roughly 20% of Google’s total advertising business. The Google Display Network allows advertisers to place contextual ads on a network of sites across the Internet (including Google properties like YouTube, Blogger and Gmail as well as over 2 million other participating sites), rather than in the search results.
So here’s what we found. Click the image to enlarge.
For now, we believe that the Google Display Network (GDN) provides advertisers with significantly more value than Facebook advertising in terms of the five key areas outlined below. As yet, Facebook’s advertising platform hasn’t kept pace with the explosive growth of its social network.
We compared Facebook and Google Display Network (GDN) in these five advertising categories:
From an advertiser’s perspective, Facebook currently falls short in all five areas when compared to the Google Display Network.
To put it another way, Facebook (currently valued at half as much of Google’s entire business) offers advertisers less advertising value than what’s offered in the Google Display Network, which makes up just a quarter of Google’s total business, makes 3x more revenue than Facebook and is growing faster, too.
Now, to be sure, Rome wasn’t built in a day, and neither was the Google Display Network – it was originally called the Google Content Network and was for a long time considered painfully inferior to the Search Network by most AdWords advertisers. But the GDN has come a long way.
Given its impressive global reach, Facebook has the potential to be as much of an advertising behemoth as Google. But the question remains – does Mr. Zuckerberg even want Facebook to be an advertising-based company? In his 2,500+ word letter to shareholders, he only mentioned advertising once. He’s been quoted as saying:
Facebook was not originally created to be a company. It was built to accomplish a social mission – to make the world more open and connected … Simply put: we don’t build services to make money; we make money to build better services.
I think Mr. Zuckerberg is in denial here – he wants to be this cool company that’s all about “connecting people,” but 85% of his revenue is driven from internet advertising. Advertising is his business model. The sooner he figures this out, the higher the chances that Facebook is actually worth +$100 billion.
For Facebook to prove its worth to shareholders, they need to change this nearly hostile attitude toward advertising. Mark Zuckerberg has said that he doesn’t want advertising to “ruin Facebook” – but it really doesn’t have to. They need to embrace advertising’s potential to build value for both advertisers and end users. This means helping businesses connect to the most relevant audience possible, deliver their message in more engaging ways, and manage and report on their advertisements more easily and completely.
Only then will Facebook be as much as it’s believed to be worth – we’re easily looking at 5+ years of work here, based on how long it took Google to get where they are today (for a fascinating glimpse into this long journey, check out our list of 26 crazy Google facts).
Will Facebook be able to deliver?
What is the Google Display Network?
The Google Display Network (GDN) is the world’s largest display advertising network for placing banner ads on Google web properties (such as YouTube, Blogger, Gmail, etc.) as well as a network of over 2 million other web sites (eg: USA Today, NY Times, etc.). The Google Display Network was formerly known as the Google Content Network.
Yes, Google has an informative video to help explain how the Google Display Network works.
While there are other display advertising options, few others have the reach that the Google Display Network offers, reaching over 83% of unique Internet users around the world.
On the Google Display Network, your Google ads can appear across a collection of partner websites and specific Google websites, such as Google Finance, Gmail, Blogger, and YouTube . Google partner sites are sites that allow Googe Display Advertising on their site, enabling you to reach audiences through their favorite sites and blogs.
Different advertising methods work differently depending on your business and ideal audience. Many advertisers find Google Display Network effective because it allows you to connect with customers across a million websites.
The Display Network can help you connect with customers on over one million websites around the world. It lets you show your ads to people visiting their favorite news sites or blogs, which is a unique benefit. The Google Display Network also allows a variety of targeting options to help ensure you reach relevant audiences.
Google Display Network retargeting allows advertisers to communicate with people who’ve previously visited key pages on your website as they browse the other websites in the Google Display Network.
Ad retargeting, also known as remarketing, can extend brand awareness, increase ROI, and bring in customers that might have been lost otherwise.
There are a wide variety of sites that your ads can appear on when you advertise on Google Display Network, ranging from news sites to hobby blogs.
While the best way to determine which banner sizes and placements are most effective is through testing, many advertisers have noted that traditional right-side 300×250 banners often perform well.
The Google Display Network site has a list of the partner sites that can display your ads with the GDN.
You can find more information about Google Display Network pricing on Google’s advertising page.
The Google Display Network site is a great resource for learning how to optimize your display ads.
Google Display Network Reserve lets advertisers guarantee impressions across brand-safe sites on the GDN. Just set your targeting options, impressions, and timing goals, and Google takes care of the rest.
Google Display Network Reserve is great when you want to achieve brand awareness in a set time period. Most advertisers use Google Display Network Reserve to launch new products, promote a limited time offer, or get word out about a specific event.
Google Display Network refers to Google display ads on YouTube, Google Finance, Gmail, Google Maps, Blogger and Google’s display ad partners. Previously, advertisers would display ads on partner sites through the Google Content Network.
The Google Display Network offers several reporting tools to help you get the most out of your campaigns. These tools include Placement Performance Reports, Demographic Reports, Reach and Frequency Reports, Campaign Insights, and View-Through Conversion Reports.
In order to have your advertisement shown on the Google Display Network, you must meet Google’s ad requirements and specifications. If you do not meet the requirements, your ad will not be displayed. Read Google’s requirements for display ads in order to pass.
Google pays attention to which websites and partner sites you visit on the Google Display Network, and uses an advertising cookie to link your browser with your interest and demographic categories. Google then uses this information to show you ads based on your interests and which sites you visit. You can change and edit the categories your browser is associated with through Google’s Ad Preference Manager.
No. Your ad data is not linked to your Google Search, Gmail, or other Google Account information.
Google associates you with interest and demographic categories based on the types of websites you visit in the Google Display Network. Google scans the pages you visit to understand the content and interests associated with that site. For example, if you visit a softball-related site in the Google Display Network, Google will add a softball preference to your cookie. Then, as you visit other websites that are part of the Google Display Network, Google may continue to show you ads related to softball, such as softball game tickets or softball equipment.
Yes, you can opt out of Google Display Network’s tracking by clicking the “Opt out” button in Ads Preferences Manager.
Yes, advertisers can use the Google Display Network to have ads appear on mobile sites and on apps that show ads.
It’s easy! Google can walk you step by step through the process of getting started with the Google Display Network.
Please read our Comment Policy before commenting.