Is Facebook truly worth a staggering +$100 billion?

That was Facebook’s market capitalization, determined by its stock price for its IPO on Friday, May 18th.

I wouldn’t call myself an investment guru, but here at nexus-security, we do know a thing or two about online advertising. Facebook’s $100 billion valuation is just half of Google’s. Considering that both Google and Facebook earn a large portion of their revenue through advertising (advertising makes up 96% of Google’s revenue versus 86% of Facebook’s), we can confidently assess this valuation from an advertising standpoint.

So, we conducted a comparative analysis of the world’s biggest online display advertising platforms: Facebook versus the Google Display Network.

Just to be clear, we are not comparing Google and Facebook as companies in their entirety. Google is a search engine, and Facebook is a social network. This analysis specifically focuses on the display advertising capabilities of Facebook against only the display advertising component of Google’s business (The Google Display Network), which represents about 20% of Google’s total advertising revenue. The Google Display Network lets advertisers display contextual ads on a network of websites across the internet (including Google properties like YouTube, Blogger, and Gmail, along with over 2 million other participating sites), instead of within search results.

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Here’s what our analysis revealed. Click the image for a closer look.

Google Display Advertising vs. Facebook: Our Findings

Currently, we are of the opinion that the Google Display Network (GDN) offers advertisers substantially greater value compared to Facebook advertising in five key areas, which are discussed below. It seems Facebook’s advertising platform hasn’t quite caught up with the remarkable growth of its social network.

We compared Facebook and the Google Display Network (GDN) based on these five advertising aspects:

• Google Display Network Advertising Reach: Both platforms boast an extensive reach. The Google Display Network (GDN) has a wider reach (it can connect with a larger number of unique individuals globally), while Facebook enjoys more pageviews (fewer users spend more time on Facebook, allowing it to reach the same users with ads more frequently).
• Google Display Network Advertiser Adoption/ Growth Rates: Facebook’s advertising revenue has grown significantly – however, it hasn’t matched the growth of its user base.
• Google Display Network Ad Performance: Facebook ads tend to have very low click-through rates (CTR) – less than 0.05%, which is half the industry average for banner ads. Why is this the case? It could be due to Facebook’s somewhat limited ad formats and targeting options, which are crucial for driving ad relevance and CTR. Google has industry-standard analytics tools, while Facebook’s reporting capabilities are rather basic. Another factor could be user intent – people might be less inclined to click on banner ads within a social network compared to other types of websites. The Google Display Network’s click-through rates were nearly 10 times higher than those of Facebook Advertising.
• Google Display Network Ad Targeting Options: Facebook currently lacks mobile advertising (a major drawback, given the rapid growth of mobile usage), retargeting (or remarketing), advertising on partner sites, and keyword-based contextual targeting choices for display ads. The Google Display Network offers all of these features.
• Google Display Network Supported Ad Formats: Facebook offers a mere two options: the traditional Facebook ad (text and an image) and the relatively new sponsored stories. This pales in comparison to the Google Display Network’s ad format selection: text ads, image ads, flash-based image ads, in-video ads, and ads designed for mobile web and mobile games.

From an advertiser’s point of view, Facebook currently lags behind the Google Display Network in all five areas.

In other words, Facebook (currently valued at half of Google’s entire business) provides advertisers with less advertising value than the Google Display Network, which only makes up a quarter of Google’s total business, generates 3 times more revenue than Facebook, and is expanding more rapidly.

Can Facebook Fulfill its Potential?

It’s important to remember that the Google Display Network wasn’t built overnight – it was originally called the Google Content Network and was long regarded as significantly inferior to the Search Network by most AdWords advertisers. However, the GDN has evolved significantly over time.

With its massive global reach, Facebook has the potential to become an advertising giant like Google. But the question is – does Mark Zuckerberg even envision Facebook as an advertising-driven company? In his lengthy letter to shareholders (over 2,500 words), advertising was only mentioned once. He has 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 being disingenuous – he aspires to be seen as the leader of a socially conscious company that’s all about “connecting people.” However, the reality is that 85% of his revenue stems from internet advertising. Advertising is his business model. The sooner he acknowledges this, the more likely Facebook will actually be worth +$100 billion.

To demonstrate its value to shareholders, Facebook needs to shift its somewhat unfavorable stance towards advertising. Mark Zuckerberg has stated that he doesn’t want advertising to “tarnish Facebook” – but it doesn’t have to be that way. They should embrace advertising’s potential to create value for both advertisers and users. This means assisting businesses in connecting with their target audience effectively, conveying their message engagingly, and managing and analyzing their ad campaigns efficiently.

Only then will Facebook reach its perceived worth – this will likely require a minimum of 5 years of dedicated effort, judging by the time it took Google to get to where it is today (for a captivating glimpse into this journey, check out our list of 26 incredible Google facts).

Can Facebook deliver on its promise?

Google Display Network FAQs

What is the Google Display Network? The Google Display Network (GDN) is the largest display advertising network globally, enabling the placement of banner ads on Google web properties (such as YouTube, Blogger, Gmail, etc.) as well as a network of over 2 million other websites (e.g., USA Today, NY Times, etc.). The Google Display Network was previously known as the Google Content Network.

I’m not a fan of reading – Is there a Google Display Network video explaining how it works?

Yes, Google has a helpful video to help explain how the Google Display Network works.

How does the Google Display Network stack up against other display advertising options?

While other display advertising choices exist, few can match the reach of the Google Display Network, which reaches over 83% of unique internet users worldwide.

What are Google Display Network partners?

On the Google Display Network, your Google ads can appear on a collection of partner websites and specific Google websites, including Google Finance, Gmail, Blogger, and YouTube. Google partner sites are websites that permit Google Display Advertising, allowing you to reach your target audience through their preferred websites and blogs.

Is Google Display Network targeting more effective than traditional media?

Different advertising strategies yield different results depending on your business and target audience. Many advertisers find the Google Display Network effective because it allows them to connect with customers across a vast network of over a million websites. This network enables you to engage with customers while they browse their favorite news websites or blogs, a unique advantage. The Google Display Network also offers various targeting options to ensure your ads reach the right people.

How does Google Display Network retargeting work?

Google Display Network retargeting allows advertisers to re-engage with individuals who have previously visited specific pages on their website as they browse other websites within the Google Display Network. Ad retargeting, also known as remarketing, can enhance brand awareness, increase ROI, and recapture potentially lost customers.

What types of websites display Google Display Network ads?

A wide range of websites can display your ads when you advertise on the Google Display Network, from news websites to hobby blogs.

Which Google Display Network banner sizes are most effective?

While the best way to identify the most effective banner sizes and placements is through testing, many advertisers have observed that traditional right-side 300×250 banners often perform well.

Where can I find a list of Google Display Network sites?

The Google Display Network website has a list of the partner sites that showcases sites where your ads can appear on the GDN.

Where can I find more information about Google Display Network pricing?

You can find detailed information about Google Display Network pricing on Google’s advertising page.

Where can I learn more about Google Display Network best practices?

The Google Display Network site is an excellent resource for learning how to optimize your display ads.

What is Google Display Network Reserve, and when should I use it?

Google Display Network Reserve allows advertisers to secure guaranteed impressions across brand-safe websites on the GDN. Simply define your targeting options, impression goals, and timeframe, and Google will handle the rest.

Google Display Network Reserve is particularly useful when you want to boost brand awareness within a specific timeframe. Most advertisers utilize Google Display Network Reserve for new product launches, limited-time promotions, or event announcements.

What is the difference between the Google Display Network and the Google Content Network?

The Google Display Network encompasses 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.

Is there a reporting tool for Google Display Network campaigns?

The Google Display Network provides several reporting tools to help you maximize your campaign performance. These tools include Placement Performance Reports, Demographic Reports, Reach and Frequency Reports, Campaign Insights, and View-Through Conversion Reports.

What happens if my ad doesn’t meet the Google Display Network ad specifications?

For your advertisement to be displayed on the Google Display Network, it must adhere to Google’s ad requirements and specifications. Failure to meet these requirements will result in your ad not being displayed. To ensure compliance, review Google’s requirements for display ads.

How does the Google Display Network determine which ads to show me?

Google tracks the websites and partner sites you visit within the Google Display Network and uses an advertising cookie to associate your browser with your interests and demographic categories. Google then utilizes this data to display ads tailored to your interests and browsing history. You can modify and manage the categories associated with your browser through Google’s Ad Preference Manager.

Is the data from my Google Display Network ad clicks linked to my Google search history, Gmail, or any other Google Account information?

No, your ad data is not connected to your Google Search history, Gmail, or other Google Account information.

What data does the Google Display Network collect about me, and how is that data used?

Google assigns you to interest and demographic categories based on your browsing behavior within the Google Display Network. Google analyzes the pages you visit to understand the content and interests associated with each site. For instance, if you visit a softball-related site within the Google Display Network, Google will add a softball preference to your cookie. Consequently, as you continue browsing other websites within the Google Display Network, Google may show you ads related to softball, such as softball game tickets or softball equipment.

Can I opt out of Google Display Network tracking? If so, how?

Yes, you can opt out of Google Display Network tracking by clicking the “Opt out” button in Ads Preferences Manager.

Does the Google Display Network display mobile ads?

Yes, advertisers can use the Google Display Network to display ads on mobile websites and apps that support ads.

How can I start advertising on the Google Display Network?

It’s easy! Google provides a step-by-step guide to help you getting started with the Google Display Network. Related: Learn more about Meta Ads vs. Google Ads here.