Is Facebook Inc (FB) Eating into Google Inc (GOOGL)’s Market Share in the Mobile Ad Market?

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Facebook Inc (NASDAQ:FB) came up with its second quarter results yesterday and surprised many on Wall Street with its Ad revenue through mobile devices, a whopping 62% of the company’s net revenue for the second quarter came from advertisements on mobile devices.

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Mark Mahaney, RBC Capital Markets managing director discussed future monetization of Facebook Inc (NASDAQ:FB) and how the company can increase its revenue by monetizing Instagram and autoplay video ads on today’s edition of CNBC’s ‘Street Signs.’

“I think this is not that far off from what we saw with Google Inc (NASDAQ:GOOGL) in 2004, 2005 and 2006. There are a lot of advertisers, who are yet to adopt social media as a marketing platform, this company [Facebook Inc (NASDAQ:FB)] is growing up more and more ad formats that are being successful and they are doing that well. If this was a biotech company, you’ll be talking about product pipeline. They have got two major products in the pipeline that are secular growth drivers, that is Instagram monetization and Autoplay video ads […],” Mr. Mahaney said.

Mr. Mahaney is of the view that Facebook Inc (NASDAQ:FB) is doing the right thing by keeping the user experience intact and not over monetizing the site. Keeping ad loads at about 5% is the right approach that Facebook Inc (NASDAQ:FB) is taking, he added. Mr. Mahaney also believes that Instagram monetization and Autoplay video ads together can lead to additional incremental revenues of about $1 billion for Facebook Inc (NASDAQ:FB) next year.

“[…] it seems like Facebook Inc (NASDAQ:FB) three to five years from now is going to try to encroach on some of those search dollars that Google Inc (NASDAQ:GOOGL) has. That’ll be the battle to watch, but not in the next year but probably years three to five,” Mr. Mahaney replied when asked if Facebook Inc (NASDAQ:FB) going to eat into Google Inc (NASDAQ:GOOGL)’s market share of the mobile ad market.

Disclosure: None

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