Media Money with Julia Boorstin

Awaiting Facebook’s IPO - A Look at Its Ad Dominance


As Wall Street eagerly waits to see Facebook’sfinancial results when it prepares to file for its long-awaited initial public offering possibly as early as Wednesday, ComScore reports that the company continues to grow its dominance in display ads – it has number one market share by far.

As Facebook steals market share and makes gains on its rivals, it delivered 28 percent of display ads in the US last year—a whopping 1.3 TRILLION display ads -- up from 21 percent in 2010. The number two player has just 11 percent share, followed by a distant third and fourth: Microsoft with 4.5 percent and Google with 3.6 percent.

So why is Facebook winning?

First, there’s the ability to target ads very narrowly using personal information from user profiles and information about how people spend their time on the service. There’s also the fact that Facebook offers a rare opportunity to connect with self-professed fans, who are far more open to marketing messages than a run-of-the mill web-surfers.

And then there’s what marketers calling “the amplification effect” – when fans of a brand spread a marketing message to their friends. ComScore Chairman Gian Fulgoni tells me communication from a trusted friend is more persuasive than communication that comes directly from a brand. With that in mind, Fulgoni predicts Facebook will continue to grow market share, and ad pricing, in months and years to come. He also points out that the number of “fans” on Facebook is growing around 50 percent a year, which will draw even more interest from brands.

So who’s buying all these ads? ComScore reports that the number one brand advertiser is AT&T —it delivers 2.2 percent of all display ad impressions. It’s followed by Credit Score Service Experian, with 1.4 percent and then Verizon , with 1 percent. Fulgoni points out that Facebook is just as popular with small businesses as it is with these mega advertisers. But it’s these Fortune 500 brands which will contribute to Facebook’s growth this year.

Tune In: Mark Zuckerberg: Inside Facebook

In seven years, Mark Zuckerberg has gone from Harvard dorm to running a business with a possible value of $100 billion. On CNBC, an interview with the Facebook CEO tonight at 10p ET/PT and Wednesday at 8p ET.

Questions?  Comments?