Google (NASDAQ:GOOG) is creeping up on market leader Facebook and should overtake the social network in U.S. display ad sales by 2013, according to eMarketer.
Facebook closed 2011 with 14 percent of the display ad market on sales of $1.73 million. Google, long a laggard in the U.S. display advertising market, nipped at the leader's heels last year, netting 13.8 percent share on sales of $1.71 million.
The U.S. display advertising market, which includes spending on online video, sponsorships, rich media and banner advertisements, grew roughly 25 percent to $12.4 billion in 2011.
eMarketer expects Facebook to maintain its lead in 2012, grabbing $2.59 billion in share, compared with $2.54 billion by Google, as the two combine to net 33 percent of the display ad market.
Facebook will start to include its Sponsored Stories ads in the News Feed and lure more big-brand advertising dollars, said eMarketer principal analyst Debra Aho Williamson. Facebook's ad revenues have been more closely watched of late as the social network hurtles toward its initial public offering (IPO) this year. The network has more than 850 million members whom Facebook can target with advertising.
Google will surpass Facebook by grabbing nearly 20 percent of the market in 2013, compared with less than 18 percent for Facebook. Google's U.S. display sales will grow 45.3 percent to $3.68 billion, with Facebook boosting sales 27.6 percent to $3.29 billion for 2013.
In 2014, the marketing researcher sees Facebook slipping to 17 percent, with Google growing to 21.7 percent market share. Google will top $4.76 billion in display ad sales, compared with $3.75 billion at Facebook. Yahoo, once the dominant display ad purveyor in the world, will slip to $1.64 billion in sales.
Why will Google pull past Facebook? eMarketer claimed stronger-than-expected performance from the company's mobile display business, YouTube and Google's DoubleClick ad network.
eMarketer principal analyst David Hallerman said Google has also been able to leverage its relationship with existing search advertisers for its display ad business.
"Google's strategy to diversify ad revenues and move in on the display market mean that the two Web giants will battle for the top spot in U.S. display ad revenues over the next few years," noted eMarketer.
While the balance of power will continue to consolidate with Google and Facebook, the next three players in the top five display ad leaderboard will watch their shares shrink.
Yahoo (NASDAQ:YHOO), which commanded 18.4 percent in display ad sales in 2008, slipped to 10.8 percent in 2011 on revenue of $1.64 billion. The company, which is trying to halt its slide under new CEO Scott Thompson, is expected to decline to 9.1 percent in 2012, 8.1 percent in 2013 and 7.5 percent in 2014.
At No. 4, Microsoft saw share of display revenue fall to 4.4 percent from 4.5 percent in 2011. AOL's share will fall to 4 percent in 2012 from 4.3 percent in 2011.