Facebook Isn't Eating Google's Lunch Yet. But It's Getting Hungry…
Citigroup’s Mark Mahaney provides an update, via a survey from online ad buyer Efficient Frontier, which surveyed its clients about their spending at both companies.
The takeaway: Advertisers spend around six cents on Facebook for every dollar they put into Google. Which sounds small, except that Google is huge and sold $29.3 billion (!) worth of ads last year. So that implies Facebook’s 2010 ad revenues were nearly $2 billion.
And if you’re a Facebook bull, you think that means the really big stuff is still to come. Mahaney:
… we think FB made 25-30% net margins. For context, in the year that Google generated $2B in Net Rev (2004), its Net Margin was 24%. In our opinion, Google’s growth trajectory post 2004 could be a proxy for FB future growth rate – given what are similar growth end-markets in Internet advertising. Also, over the last several years, Google has expanded Net Margins to 40%+.
Reminder that Facebook’s last funding round pegged the company’s value at $50 billion, which means investors believe it will eventually be worth much more. Google’s investors, meanwhile, think that company is worth $185 bilion.