Facebook Grabs No. 2 Spot in Online Ads as Mobile Drives Sales

Facebook Inc. (FB) is now the top seller of online advertisements after Google Inc. (GOOG), researcher EMarketer Inc. said.

The world’s largest social-networking service is on track to take in $3.17 billion, or 7.4 percent, of U.S. digital-ad spending this year, while Google will account for $17 billion, or 40 percent, EMarketer said in a blog post today. Facebook was fourth behind Google, Yahoo! Inc. (YHOO) and Microsoft Corp. (MSFT) in 2012.

Facebook is stepping up its ad efforts, generating half of revenue from mobile and testing video promotions that play automatically in users’ news feeds. Instagram, which Facebook bought for more than $700 million last year, is also rolling out ads on its photo-sharing service. Facebook and its rivals are battling for a share of a digital-ad market that’s projected to grow 25 percent to $53.4 billion in the U.S. in 2015.

“Facebook and Google are both major drivers and recipients of this growing market, domestically and internationally,” EMarketer said. Both companies are also the top-two ad publishers globally, the researcher said.

Mobile ad spending will account for 23 percent of digital-ad spending this year, up from 12 percent in 2012, New York-based EMarketer said.

Instagram’s first four ad campaigns are beginning to reach large audiences, the Facebook unit said in a blog post today. Levi Strauss & Co. reached 7.4 million people in the U.S. over nine days, while Ben & Jerry’s Homemade Inc. reached 9.8 million people over eight days. Of the people who saw a promotion for the Scotchy Scotch Scotch-flavored ice cream, 17 percent became aware of the product and connected it with the company, according to Instagram.

To contact the reporter on this story: Sarah Frier in New York at sfrier1@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net

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