The opportunity represented for Facebook in the gap between time
spent and ad spending was forcefully argued by Needham analyst
Laura Martin, who helped stop Facebook's stock-price slide when she
slapped a "buy" rating on the stock. "We believe that Facebook
should have higher revenue than Google over time because the number
of users is about the same but the average time spent on Facebook
is 14 minutes per day, which is nearly three times Google.com's
five minutes per person per day," she wrote in a report.
While the time-spent argument makes directional sense, it
doesn't tell you how many dollars will shift or in what time frame.
Kleiner Perkins principal Mary Meeker's latest "State of the
Internet" report shows the gap between percentage of time and what
would be the equivalent percentage of ad dollars spent on the web
and mobile is worth about $20 billion in the U.S. alone.
But this assumes that all media and the time spent with them are
equal in terms of the impact on the consumer and that marketers
should use and value them in the same way. "It's valuable but very
deceiving in that it understates the differences between
platforms," said Simulmedia CEO Dave Morgan.
In fact, the shift of dollars to attention will prove less
linear and predictable for Facebook than for online display, which
basically transplanted an approximation of the print ad model to
the web -- or video, which is a transplant of TV's model.
Facebook's audience is huge and valuable, but there's no similar
offline corollary. Take GM, which revealed it spends just a quarter
of its Facebook budget on Facebook advertising, an expenditure it
apparently feels it can do without.
"It's risky for any company that is used to spending its
marketing dollars in a certain way to change it dramatically and
quickly without being sure what the effect is going to be," said
ComScore Chairman Gian Fulgoni.
None of this means Facebook won't figure it out, or that brands
won't double down on advertising to support their content. But it
does weaken the argument that just because Facebook commands an
increasing share of audience attention, it should command equal
share of ad dollars.
The good news for Facebook is that the vast majority of
unshifted advertising is focused on brand advertising, the enormous
sums that the biggest advertisers spend to change people's
preferences. This kind of advertising appears to be Facebook's
strength over, say, direct-response metrics such as clicks and
Even better news is that advertising is just one revenue
opportunity; others include e-commerce, payments, virtual goods or
even content-payment services. When your phone becomes a wallet,
Facebook has a chance to win there, too.
Ad dollars may shift. They may not. In the end, it may not