Capital Market Laboratories

ADVERTISING

PREFACE
Apple and Amazon will try to find their way into the advertising world, but right now, there are two companies that are utterly dominating the landscape.

Let’s examine in just a few charts the dominance that Google and Facebook are experiencing in the online advertising realm, how they compare to each other, and why Facebook has one quarter of Google’s revenue but is more than half as large in market cap.

#1 THE MARKET
We can start broadly and note that Google and Facebook combined account for more than 75% of the total online advertising market:



It’s also critical to note that while Facebook’s growth is nearly 60% year-over-year, it’s advertising (and total revenue) is substantially lower than Google’s. This is only U.S. data, but we’re looking at nearly $30 billion in ad revenue for Google versus less than $8 billion for Facebook. Of course Facebook is growing faster than Google, it’s tiny compared to it.

If we look at raw numbers, Google has shown $5 billion in ad revenue growth from 2014 to 2015 in the United States, while Facebook showed just $2.5 billion. Let’s not lose the forest for the tress.

Further 97% of Facebook’s revenue comes from ads, while Google is at around 80% – meaning Google has a substantially more diversified business.

#2 MOBILE ADS
Having said all of the above in comparing Google to Facebook, when we dive into the details, mobile is by far the fastest growing segment of online advertising, and Facebook is the king.



Desktop advertising, charted in the dark blue color has started to stagnate while mobile is just taking off. Facebook gets 79% of its revenue from mobile, while Google drove $24 billion in 2015 from mobile ads out of a total of $67.4 billion. That’s just 35% of its revenue from mobile ads.

#3 FACEBOOK WORLDWIDE MOBILE ADS
While Facebook reported $19.7 billion in total revenue in the last year, if you’re wondering how its valuation can be anywhere near Google’s given the data above, it’s this chart you’re looking for from our friends at Statista:



Mobile ads alone are forecast to reach over $60 billion within a few years. Now, that’s a forecast, not a fact, but it is the bullish thesis behind Facebook, if we had to sum it up in one chart.

#4 TOTAL GOOGLE ADS
Now we can turn to Google’s worldwide revenue from advertising – this is mobile and desktop combined from Statista:



There is the $67.4 billion umber we discussed above.

#5 VIDEO
All of those charts are predicated on an underlying theme that is absolutely stunning. Video advertising has quickly become the most important and valuable space in the adverting world and Google and Facebook are the kings. Check out this chart that shows the most popular video sites in the world:



We have an entire dossier on the radical shift to online video ads and how the $220 billion linear TV advertising world is about to crumble and Google and Facebook (and Twitter) are going to pick up the pieces.

WHY THIS MATTERS
This is just the surface analysis. There’s so much going on with technology it’s impossible to cover in one report. Google is a Top Pick for CML Pro, but, to take it a step further and to actually find the ‘next Google’ or 'next Facebook stock’ we have to get ahead of the curve. This is what CML Pro does. Our research sits side-by-side with Goldman Sachs, Morgan Stanley and the rest on professional terminals, but we are the anti-institution and break the information monopoly that the top .1% have.

Each company in our 'Top Picks’ is the single winner in an exploding thematic shift like artificial intelligence, Internet of Things, drones, biotech and more. In fact, here are just two of the trends that will radically affect the future that we are ahead of:



That chart plots the growth in 4G usage worldwide and how it will grow from 330 million people today to nearly 2 billion in five years. This is the lifeblood fueling every IoT and mobile device on the planet and CML Pro has named the single winner that will power this transformation. Then there’s cyber security:



Market correction or not, recession or not, the growth in this area is a near certainty, even if projections come down, this is happening. CML Pro has named the single best cyber security stock to benefit from this theme.

These are just two of the themes we have identified and this is just one of the fantastic reports CML Pro members get along with all the visual tools, the precious few thematic top picks for 2016, research dossiers and alerts. For a limited time we are offering CML Pro at a 90% discount for $10/mo. with a lifetime guaranteed rate. Join Us: Get the most advanced premium research delivered to your inbox along with access to visual tools and data that until now has only been made available to the top 1%.

Thanks for reading, friends.