June 15, 2011 | In: Opinion, Technology

Facebook Advertising vs Google Advertising

I have touched on the subject of Facebook Advertising vs Google Advertising in several of my articles, but I’ve never really dedicated a full article for this topic. But now that we’re sure that the Facebook IPO is imminent (it’s only a matter of time) I think it’s time to write a full article on the subject, because, after all, advertising is currently Facebook’s main source of income, and will remain so once the company goes public.

I’ll start by discussing the history of Google’s and Facebook’s advertising platforms, the strengths and weaknesses of each, how the two compare to each other, and which company will prevail as the master of online advertising once the war, that has not yet officially started between the two companies, is over.

History

History of Google’s Advertising

Google’s online advertising is officially called Google Adwords, and was officially launched on October, 23rd, 2000. Google at first had only a few hundred businesses advertising with them, but the number grew quickly as companies started seeing value in online targeted advertisement (displaying ads depending on the user’s search). The concept is simple, you search for “buy computer” on Google, and you will see the following:

Figure 1: Google Adwords Example – Courtesy of google.com

The listing in the above image contains advertisers who pay money for Google for each click they receive. In its simplest form, the advertisement that appears first belongs to the company who’s paying the most by click to target that specific keyword (however, note that often even if a company has the highest bid for a specific keyword, its ad still won’t appear on the top because its CTR is too low).

On March 4th of 2003, Google introduced Adsense, which quickly became the favorite method for website owners to monetize their websites. Adsense allowed Google to make money from their advertisers for ads appearing on other websites (Google refer to these other websites as the content network).

On April 13th, 2007, Google bought DoubleClick, which was a very prominent advertising company and one of Google’s main competitors.

On April of 2008, Google started using cookies to better understand the users’ search behavior on the Internet, so as to display to them even more relevant ads. Since most websites use at least one Google service, Google was able to track visitors from one website to the other (through their cookies), and was indeed able to serve very relevant ads.

History of Facebook Advertising

Facebook’s advertising is very recent when compared to that of Google’s. Facebook started allowing companies to advertise on its website in 2006. I remember back then the CTR was horrible (something like 1 click for every 25,000 impressions – how I know? I’ve used it in my previous company), even though the advertiser was able to select the demographics of the Facebook users he wishes to target. Not only that, most of the ads back then consisted of either games or scammy advertisements (by the way, the games were also scammy in a way). Last year, Facebook started cracking on these scammy ads and most of them were filtered out of the system, and as of then, the quality of ads being displayed on Facebook increased, and so did the CTR. Not only this, most of the ads that I see right now when I’m on Facebook are very targeted. They know my age, they know my background, they know who my friends are, they know everything about me!

Facebook still doesn’t offer ways for website owners to make money from their advertising, but sooner or later they’ll probably do.

Now that we’ve examined the history of the advertising business of both companies, let’s list the strengths and weaknesses of each.

Strengths and Weaknesses

Google Advertising

  • Strengths

    • Mature: The company has been in the online advertising business for a very long time, it knows the ins and outs, it has probably done thousands and thousands of split testing to know what works and what doesn’t when it comes to getting these targeted clicks.
    • Trusted: I can’t think of any online advertising program that is trusted more than Google’s. The advertisers trust it – they know that Google will not overcharge them, they also know that Google will refund them for any invalid clicks – and the visitors trust it – they know that Google does not allow scammers to use their advertising program, they will also know that they won’t be infected with a virus if they visited a page advertised on Google.
    • Solid: When was the last time you saw their advertising system down? When was the last time you saw their advertising system screwing up the format of the page, or displaying weird and irrelevant ads? I can answer this myself: “I don’t recall when, maybe never!”
    • Exposure: Google is by far the most visited website on this planet. Ads on Google benefit from this immense exposure and are displayed billions of times every day.
    • Loved by the publishers: Publishers who serve Google ads on their website (e.g. those who use Adsense) are very happy with the extra (sometimes the only) income that they’re getting from Google. The more publishers use Adsense, the more money Google makes.
  • Weaknesses

    • Guessing demographics: In cases where the user is not logged in to his Google account, Google has to guess who the user is, what his interests are, and what he wants at this very moment. Google does this guessing through cookies. But what if the user disables his cookies? And even if he didn’t, it’s still called guessing, right?
    • Can be very expensive for advertisers:There are some clicks, believe it or not, that cost the advertiser $80. Yes, you heard (or maybe read?) that right, a simple click by a little kid may cost someone, somewhere up to $80. On the other hand though, if the person is not making money from Google, he wouldn’t advertise on it.

Facebook Advertising

  • Strengths

    • Very Targeted Advertising: As I stated above, Facebook knows everything about you, including your age, your gender, your location, who your friends are, what are your interests, etc… Facebook often doesn’t need to guess at all to know the information they need about you, and if any guessing is needed, all they need is understand who you are either by analyzing your friends and/or reading and analyzing your posts/comments (for example, if in most of your comments/posts you have the word “stock” then it’s a sure bet that you are interested in stock trading, and targeted ads will be displayed).
    • Potential: Facebook is still growing, and will keep growing exponentially for at least the next 5 years. Even now, most people who are willing to buy anything online are already on Facebook. That’s an advertiser’s heaven! He has the world to sell to, and all that he needs to do is make the right product, the right ad to promote that product, and target the right people. Unbelievable!
    • Loved by advertisers: Advertisers, whether local or international, are now turning to Facebook to advertise their products/services. Advertisers are offering freebies in return for a “like”. And the more “likes” an advertiser has, the more organic (not paid) traffic from Facebook they will have. Advertising on Facebook can result in viralness if many people like your product (someone will see that a friend has liked a product, so he takes a look and he “likes” the product himself, and then the friend’s friend checks this product and likes it, and so on…)
  • Weaknesses

    • Immature: Facebook is still experimenting when it comes to advertising, they still toy with the placement of the ads from time to time. Additionally, the control panel that is used by the advertisers is still not as advanced as Google’s, and there are many features missing.
    • Not very trusted: I think this problem originates from Facebook’s decision to allow scammy ads such as those advertised by Zynga when they first launched their advertising program and for a very long time. However, people’s trust in Facebook’s ads is now increasing by the day.
    • Low CTR: Facebook’s CTR is still relatively very low, even though it is now much better than before, probably because trust in Facebook’s ads has increased.
    • Ads are only displayed on Facebook: In other words, Facebook doesn’t have a publisher program, which can potentially generate even more income than the one generated by the Facebook website itself.

Now that we have listed the strengths and weaknesses of both advertising platforms, we can compare the two…

Comparison Between Google Advertising and Facebook Advertising

  • Google advertising is mature, Facebook’s advertising is not. +1 for Google.
  • Google guesses information about it users, Facebook’s knows information about its users. + 1 for Facebook.
  • Google is very trusted, Facebook is somehow trusted. +1 for Google.
  • Google ads have a high CTR, Facebook ads have a much lower CTR. +1 for Google.
  • Google’s growth, when it comes to acquiring new advertisers, is now predictable and somehow flat. Facebook’s growth is exponential. +1 for Facebook.
  • Google is a website that existed for a long time, and is very hard (nearly impossible) to imitate (because of the underlying technology being used). Facebook, as a product and a brand, is becoming increasingly hard to imitate, and in a year or two, no one will be able to clone it technically. Tie.
  • Google has Adsense, Facebook doesn’t. +1 for Google.
  • Google doesn’t enjoy the same love and enthusiasm advertisers have for Facebook. +1 for Facebook.

And the Winner Is…

Looking at the above list, it’s obvious that it’s Google (which scored 4 vs 3 for Facebook), but only for now. Facebook is on its way to becoming very trusted with a mature advertising platform. And if and when that happens, then Google will have some serious issues to deal with, because once Facebook starts stealing advertisers from Google, Google will know that it’s the beginning of the end of its web dominance era that started shortly after the beginning of the millennium.

This’ll probably not happen until 5 years from now, and I really hate to see it happen, but if you think about it, Google did this to Yahoo, they just came up with something better, and when something better than Google comes along, Google must accept it with the same grace that Yahoo did.

1 Response to Facebook Advertising vs Google Advertising

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Does Google Charge for Android? « Fadi El-Eter

January 21st, 2012 at 12:31 am

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