May 16th, 2012
07:00 AM GMT
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(CNN) – Which platform is better to advertise on, Google or Facebook?

On Tuesday, General Motors announced it will stop paid advertising on Facebook. "This happens as a regular course of business and it's not unusual for us to move things around various media outlets," the company said in a statement. But coming the week Facebook has its initial public offering, the announcement is raising more than a few eyebrows and begs the question:

Is Facebook really worth $100 billion?

WordStream, a U.S.-based search engine marketing company, released a study Tuesday comparing the advertising influence of display ads on Google versus ads on Facebook. The results: While Facebook is good, Google is better.

Both companies have a large advertising reach, but Google Display Network reaches 80% of global online readers versus Facebook’s  reach of 51%.

“Facebook's advertising growth has been strong – but it hasn’t kept pace with growth in its user base,” WordStream’s Larry Kim wrote in his blog.

Facebook’s click-through rate (CTR) on ads is less than 0.05%, according to WordStream’s calculations, “just half the industry average for banner ads,” Kim wrote. “Why? It may be Facebook’s relatively slim offerings in terms of ad formats and targeting options.”

Facebook currently has only two options for advertisers – a standard ad and sponsored stories. “This is paltry compared to Google’s display network ad format options: text ads, image ads, flash-based image ads, in-video ads, as well as ads for mobile web and mobile games,” Kim wrote.

“Given its impressive global reach, Facebook has the potential to be as much of an advertising behemoth as Google,” Kim said. “But the question remains – does Mr. Zuckerberg even want Facebook to be an advertising-based company? In his 2,500+ word letter to shareholders, he only mentioned advertising once.”

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soundoff (6 Responses)
  1. leke soyemi

    this is great for the joint venture biz.

    May 16, 2012 at 4:40 pm |
  2. Joel Bondorowsky

    Yes, Google has more reach, but Facebook gives advertisers the ability to more precisely target their audience. Facebook does this by giving advertizes the ability to target their users by their likes, the groups they belong to, the pages they are fans of, as well as their demographics and sociographics.

    May 16, 2012 at 6:53 pm |
  3. Alex Povolotski

    Have you seen any ads on Facebook at all? I haven't and I like it that way because even if they exist, they're non-intrusive.

    May 17, 2012 at 4:41 pm |
  4. blessedgeek

    Joel Bondorowsky doesn't know what he is talking about.

    May 17, 2012 at 11:25 pm |
  5. Sanjay Harris

    Google needs a strategy for capturing all those "friends" on facebook. Google Plus isn't cutting it, at least not in its present incarnation. Google is rich, why not pay people to migrate over to Google Plus. I'm only partly joking. Perhaps if Google Plus (or something with a new spiffier name) offered a more "application rich" experience (think Android on steroids) and an easy migration of friends to the new platform, then Google could eat Facebook's lunch.

    May 19, 2012 at 6:14 am |
  6. daniel

    Google would be the better platform. But advertisements in general are pretty annoying. Facebook was supposed to be free from advertising because Zuckerberg thought FB was bigger than just advertising. That's shouldn't change.

    May 19, 2012 at 2:22 pm |

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