As Facebook Ad Share Surges, Smaller Sites in Danger

New data from online research firm Comscore shows Facebook had 27.9% of the U.S. display advertising market, up from 21% in 2010. Yahoo!’s (NASDAQ: YHOO) share was 11%. Google (NASDAQ: GOOG) and Microsoft (NASDAQ: MSFT) had 5% each. That leaves the balance of the market with a little over 51%. Given Facebook’s advance over the past three years, small and modest-sized websites may be hurt even more than their larger competitors, despite the fact that the dollar value of display advertising advances every year.

The analysis of display advertising market share rarely mentions the tier of sites below the largest ones by audience. Those most likely to be hurt badly, if they have not already been, are the online sites of old-line media companies. The New York Times (NYSE: NYT) has had trouble with its very modest online ad growth. Among sites measure by Comscore, it had 76.4 million unique visitors in December to Facebook’s 152.5 million. And Facebook’s audience continues to grow quickly. The New York Times’ does not. Gannett (NYSE: GCI), which announced earnings yesterday, has confronted the same challenge. Its increase in internet ad revenue last quarter was depressing and hardly enough to offset drops in traditional print advertising. It had 44.1 million unique visitors in December, despite the fact that it owns the giant national newspaper USA Today. Scripps Networks (NYSE: SNI) and the Washington Post (NYSE: WPO) are in a position that is just as difficult.

Facebook has not only started to squeeze out the major portals. It takes an ongoing piece of a market that has thousands of websites in it. This display advertising market, which appeared so promising just a few years ago, is hardly promising at all.

Douglas A. McIntyre

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