A recent report from London-based research firm, Ampere Analysis states that Facebook, Inc. FB has been consistently gaining traction over Google's GOOGL YouTube as a platform for online marketing and might as well surpass the latter.
The report states that the two tech giants are already into an advertising ‘arms race’ with each of them vying for more monthly active users. In 2014, the number of monthly active users for Facebook was 1.4 billion while that for YouTube was slightly lower at 1.3 billion. However, Facebook’s recent efforts to attract quality content owners coupled with its ‘awareness building’ image bodes well for the company.
Facebook Vs YouTube
Facebook has undertaken a number of initiatives from acquisitions to research in order to enhance its marketing capabilities. It has witnessed a significant improvement in engagement levels following the launch of its autoplay video feature. Simultaneously, the social media giant is also working on boosting its user base (especially mobile users), which is encouraging news for marketers. Facebook also offers scope for data collection that can be used to gain crucial insights into consumer behavior.
However, the two companies charge advertisers differently. YouTube charges advertisers once the whole advertisement has been viewed. Facebook, on the other hand, starts charging once the video has been viewed for three seconds. Also, while Facebook is preferred by marketers before the launch of a product for creating brand awareness, YouTube is more advertiser friendly as the ads can be shown anytime during a video view.
YouTube remained ahead of Facebook in terms of video views in 2014 but the latter is gaining traction rapidly as per the latest data. Moreover, even after so many years, YouTube is still not profitable for Google. On the other hand, average revenue per user for Facebook (73 cents in 2014) is significantly higher compared to YouTube (28 cents), allowing the former to make sizable investments. However, YouTube has added a number of new features like video shopping, news offerings and is also taking initiatives to retain content creators.
As per a report from eMarketer, total ad revenues for YouTube are expected to reach $1.99 billion by 2017 (against $1.55 billion in 2015) but the rate of growth is expected to moderate over time (6.2% in 2017, down from 39% in 2015).
To Conclude
Per the research firm ZenithOptimedia, online video will continue to grow around 29% per annum by 2017. The report also states that by 2017, the Internet will outdo TV advertising in as many as 12 prime markets and is likely to represent 28% of worldwide ad spending. The firm projects that in 2015, global ad spending will touch $531 billion.
The immense potential in the video advertising market will no doubt lead to stiff competition among both big and small players. However, it will create more innovative and targeted ads for consumers on both the media platforms. However, the report states that ultimately marketers will consider the returns per view generated from each platform, which means that Facebook still has a long way to go.
Facebook has a Zacks Rank #3 (Hold). Better-ranked stocks in the technology space include LendingClub Corporation LC and Synacor, Inc. SYNC, both having a Zacks Rank 2 (Buy).
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