How Google helps Facebook gain ad market share

August 12, Beijing Time - According to foreign media reports, investment research analysts from UBS including Eric J. Sheridan, Vishal J. Patel, and Timothy E. Chiodo recently released a research report to investors. In the report, they claimed that Google's recent redesign of Gmail — moving "promotional" emails into a special folder instead of cluttering users' inboxes — will be highly advantageous for Facebook.

These analysts at UBS believe that the readjustment of Gmail will reduce the efficiency of email marketing. Consequently, it is anticipated that email marketing efforts will shift towards Facebook, as Facebook allows brands to deliver targeted display ads to users, which are not custom advertisements distributed via email.

UBS estimates that with this assistance from Google, combined with Facebook's new video ad product, these factors are expected to drive Facebook’s revenue up to $9.14 billion in 2014. Currently, the industry expects Facebook’s revenue this year to reach approximately $6 billion. Meanwhile, UBS also claims that Facebook's advertising revenue growth comes at the expense of declining revenues in similar businesses of companies like Yahoo!, The New York Times, and ValueClick.

UBS believes that Facebook's advertising business has tremendous growth potential. In their report, UBS stated: "Based on our estimates, although Facebook currently generates more revenue per user than Yahoo! and AOL, it still lags significantly behind Google. Despite users spending nearly the same amount of time on Facebook as they do on Google sites, there is a clear disparity in revenue between the two. However, our analysis indicates that Facebook has significant room for future growth." UBS predicts that by 2014, Facebook could generate daily revenues ranging from $2 million to $4 million solely from its video ad products.

However, UBS's optimistic view on Facebook's display advertising business does seem somewhat surprising, given that during the second-quarter earnings call this year, Facebook's Chief Operating Officer Sheryl Sandberg claimed that Facebook's display advertising business is not as large as others imagine.