Facebook’s Display Ads Slow, Was It the Amino Diet?

While breaking new ground in social advertising, Facebook’s (FB) bread and butter has been display ads. Those are the banner ads, video ads and the like that companies can buy to reach lots of eyeballs. Those ads brought in most of Facebook’s $3.7 billion in sales last year and made Facebook the number one company for display ads.

In its S-1, Facebook said that customers for these included Wal-Mart (WMT) and Diageo (DEO), as advertisers “use Facebook in order to more precisely reach their target audiences among our users and to leverage social context and our social distribution channels to increase engagement.”

To be honest, I was pretty unimpressed. You can read the story here, but the ads running on my Facebook screen struck me as off-target, advertising Zynga games I avoided, diets (including the Amino diet) I wouldn’t go on, and really ugly summer dresses I wouldn't wear. Also, raisins. I have no complaints about those.

FB Chart

FB data by YCharts

This week research firm eMarketer lowered its estimates for Facebook’s display ad revenue. The firm had predicted Facebook would take in $2.58 billion in display sales this year, up from $1.74 billion last year, writes the Wall Street Journal. But eMarketer lowered that estimate to $2.16 billion.

Meanwhile, it predicted that Google (GOOG) would surpass Facebook in the display ads business -– going from $1.38 billion last year to $2.31 billion this year. That comes not long after research firm IDC said Facebook’s U.S. market share for online display ads fell in the first quarter, while Google’s rose, as Investor’s Business Daily reported.

FB Revenue Growth Chart

FB Revenue Growth data by YCharts

That looks bad for Facebook, but chief Mark Zuckerberg is focusing on mobile. Speaking at the recent TechCrunch conference, he told a crowd that Facebook’s Sponsored Story ads that pop up in in mobile news feeds are doing better than display ads.

I can’t wait to see what those will bring to my cell phone, assuming they’re not too small to read.

Emily Lambert is an editor for the YCharts Pro Investor Service which includes professional stock charts, stock ratings and portfolio strategies.

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