Facebook is About to Surpass This Top Media Site in Ad Revenue

Larry Kramer is the Founder and Former CEO of CBS Marketwatch.com. He was the first president of CBS Digital and sits on the Boards of Discovery Communications, Inc., American Media Inc., Freedom Communications, Inc., Answers Corp., Black Arrow Inc., and Harvard Business School Publishing. He is the author of the book C-Scape: Conquer the Forces Changing Business Today and runs a blog by the same name.

Major advertisers, those who buy display ads, are finally beginning to figure out how to reach audiences through social networks, and have begun to shift significant dollars into Facebook. Research firm eMarketer estimates that Facebook display advertising revenues will grow 80.9% this year to $2.19 billion, giving Facebook 21.6% of all online display advertising – up from 13.6% in 2010.

Yahoo!’s (NASDAQ:YHOO) US display ad revenues will increase by double digits each year from 2010 through 2012. Despite that, not only will Facebook’s display revenues surpass Yahoo!’s (NASDAQ:YHOO) this year, Google’s (NASDAQ:GOOG) revenues will exceed Yahoo!’s (NASDAQ:YHOO) next year,” said David Hallerman, principal analyst at eMarketer. “What that leapfrogging trend confirms is the strong demand among brand marketers for online display ad placements.”

Yahoo (NASDAQ:YHOO) is expected to grow from 16.1% of the market to 16.4% this year. Despite projected double digit growth in display revenue for Yahoo this year and next, both Facebook and Google (NASDAQ:GOOG) are growing much faster. Google (NASDAQ:GOOG) is expected to pass Yahoo (NASDAQ:YHOO) and fall into second place in Display advertising by 2012 with 16.7% of the market. At that point, Facebook is expected to have 23.8%.

Google (NASDAQ:GOOG) will continue to dominate the larger Search advertising category, expecting to go from 71.4% of that market last year, to 75.2% this year and 76.6% next year.

The biggest loser in both categories is expected to be AOL (NYSE:AOL), which had 5.3% of the display advertising market last year, and will drop to 4.4% this year and 3.7 % next year, according to eMarketer. AOL (NYSE:AOL) is also slipping in search, where it had 2.3% of the market last year, dropping to 1.9% this year and 1.5% next year according to the researcher.

Larry Kramer is the Founder and Former CEO of CBS Marketwatch.com. He was the first president of CBS Digital and sits on the Boards of Discovery Communications, Inc., American Media Inc., Freedom Communications, Inc., Answers Corp., Black Arrow Inc., and Harvard Business School Publishing. He is the author of the book C-Scape: Conquer the Forces Changing Business Today and runs a blog by the same name.

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