Google (NASDAQ: GOOG ) has ceded no small amount of territory to social network
Facebook. The companys new Google+ social network is about more than just
stealing away Internet surfers idle time from Mark Zuckerbergs phenom. Despite
impressive growth during the past three years, Google has watched its display
advertising business trounced by Facebook again and again. Where Google trailed
just behind Facebook in the race to catch leaders like Yahoo (NASDAQ: YHOO ) and
AOL (NYSE: AOL ) back in 2009, Facebook is poised to lead the display ad market
by the end of 2011 with $2.19 billion in revnue. This is compared to eMarketers
projection that Google will pull in $1.15 billion this year, the first time
Google will pass the $1 billion mark in display advertising. Now, Facebook is
gunning for the market that Google spent $1.65 billion to try to control.
Facebook video is gunning for YouTube. Research group comScore (NASDAQ: SCOR )
published its report on the online video market for July and found that Facebook
has pulled into the No. 3 spot among website-based video providers. The social
network enjoyed an audience of more than 51 million unique video watchers over
the month. Although it didnt top the Sony- (NYSE: SNE ) and Vivendi-owned music
video site VEVO, it did beat out AOL, Yahoo, Microsoft s (NASDAQ: MSFT ) video
sites, Viacom s (NYSE: VIA ) video sites (like MTV), and Hulu . Googles YouTube
still leads by a wide margin with 158 million unique viewers more than three
times Facebooks audience but its the growth of that audience that should worry
Google. In January, Facebook had just 42 million unique viewers per month. It
was in March that Facebook started partnering with movie studios to offer
low-cost movie rentals. Its first partnership with Time Warner (NYSE: TWX ),
offering a $3 rental of The Dark Knight , has been successful enough that other
companies are joining the fray. Miramax Films announced Monday that it is
opening its own Facebook movie channel, Miramax eXperience, that lets users rent
from a library of 20 movies at $3 for 48 hours. Movie rentals are now purchased
with 30 Facebook Credits, the social networks virtual currency . On a long
enough timeline, Facebook might not need to match Google for unique viewers it
might simply have to surpass them in revenue. Facebooks users already have
embraced purchasing the networks virtual currency for use in social games like
Zyngas Farmville, and leftover Facebook Credits from bulk purchases will lead to
increased rentals. Although Google recently bulked up its own rental business on
YouTube, it will struggle to find an audience that isnt accustomed to using the
site as a pay service. Its advertisements that ultimately will deal the killing
blow (if it comes) in the battle. Advertisers likely will flock to Facebook as
its audience continues to grow, as it has over the past seven months. Research
group Tubemogul found that around 40% of viewers on Facebook watch a video ,
including advertisements, to completion. Only about 25% of the audience
continues to watch ads on other video sites. Maybe Google+ will take the world
by storm during the next two years and shrink Facebooks audience. Google will
take back its hopes of becoming display ad king (in addition to its title of
contextual advertising king) and YouTube finally will start earning its keep.
Maybe not. Either way, the technology company has yet another fight on its
hands. As of this writing, Anthony John Agnello did not own a position in any of
the stocks named here. Follow him on Twitter at
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