Facebook Trounces Yahoo, Microsoft, Google in Display Ads

Facebook led Yahoo, Microsoft, Google and others in display ads, capturing nearly one-quarter of all impressions in the United States as its 500 million users engaged with the social network.

Facebook led all online publishers with nearly one-quarter of all display impressions, a trend that should amplify fears for Google, Yahoo and Microsoft that the social network is becoming a digital ad clearinghouse.

Display ads include the graphical online ads that dot Facebook's Web pages, appearing whenever the social network's 500 million-plus users log on and surf the site.

These users helped generate 297 billion ad impressions, good for 23.1 percent of the market and dwarfing rivals for the third quarter, according to researcher comScore.

Facebook's increased its market share for display ads 13.9 percentage points from 9.2 percent in Q3 2009, easily swiping the mantle from long-time leader Yahoo.

Yahoo Sites took the distance second spot with 11 percent on 140 billion impressions. Microsoft Sites took No. 3 with 64 billion impressions, or 5.0 percent of the market. Google barely rated, with 2.7 percent of display ad share.

Why the disparity between Facebook and the rest of the field? Aside from innate ability to keep users socializing on its Website and sharing info, Facebook has ramped up its online ad efforts under former Google ad chief David Fischer.

Moreover, Facebook ads sell at a big discount compared display ads sold on Yahoo, Microsoft and Yahoo.

Reuters cited Evercore Partners analyst Ken Sena who said the CPM (cost per thousand impressions) for Facebook's U.S. display ads is roughly $1, compared with the $3 CPM for display ads on Yahoo's Sites in the U.S.

Facebook's lower price point means it must serve more ads to keep up with revenue earned by Yahoo and the others.

Even so, the news further cements the value of social networking for Facebook and others of its ilk, such as social game providers Zynga, Playfish and Playdom. Google, too, sees the value in this, noting that display ads are operating at a $2.5 billion run-rate.

Overall, comScore found that Facebook and others propelled 1.3 trillion display ads to U.S. Internet users during Q3, a 22 percent increase from a year ago.