Can Facebook Really Compete With Google Adsense?

With its stock price sinking link a rock, Facebook is planning aggressively to move into areas outside of their social network.  While the latest speculation is that Facebook will be expanding the Facebook search feature to show results other than Facebook pages, perhaps the most interesting possibility for online marketers and webmasters is Facebook’s potential venture into online ad market.

Moving into the display ad market – a market that has been dominated for the last 10 years by Google Adsense – seems like a logical move.  While Facebook generated just a bit over 3 billion in revenue last year, mostly from PPC ads on their social network – Google Adsense earned 2.88 billion in just the last 3 months of 2011 alone.

Will Facebook Successfully Move Into Online Ads?

While Facebook has already built a solid revenue stream with the PPC ad platform on its social network, Adsense has been dominating the online display ad market throughout the entire web.  Although there have always been plenty of competitors in the online display ad space, none have managed to take on Adsense head on.  Instead, competitors have succeeded by carving out their own niches.

Adsense’ market strength comes primarily from its large advertiser and publisher base, combined with its extremely optimized targeting technology.  This allows Adsense to offer publishers higher payouts.  Competitors that have attempted to attack Adsense head on have always failed due to their inability to match Google’s payouts at a sustainable level.

Unlike previous Google competitors, Facebook already has a strong base of advertisers to draw from who utilize the Facebook.com self serve ad platform to target Facebook users.  Additionally, virtually every webmaster/blogger on the web has a Facebook “like” button on their website.  Facebook also has one of the largest databases of user analytics and demographic information in the world – information it can use to help advertisers accurately target potential customers.

Is A Facebook Ad Network Imminenet?

In recent months, Facebook has not only changed its privacy policy to permit the serving of ads to users away from the Facebook.com site, but they’ve also been seen running display ads on their partner website Zynga.com.  Many experts – including the famed technology blog TechCrunch – have speculated that these tests are a precursor towards the launch of an ad network – outside of Facebook.com.

For webmasters who have longed for a competitor to Adsense, this is certainly welcome news.  But although Facebook may have the best chance of any company in the last 10 years to take a significant chunk out of Google’s display ad market share, they still face significant challenges.

Not only will Facebook be attempting to take on a company that has dominated the space for a full decade, but privacy watchdogs have been highly critical of Facebook’s usage of its user data.  Facebook will likely face an even stronger public outcry when it attempts to use its user data to track and target users outside of Facebook.

 Whether Facebook will be able to take a significant chunk out of Google Adsense’s market share remains to be seen.  But one thing is certain – Facebook has all the tools necessary to succeed in its attempt.