As Google's ad share falls, Facebook reaps the benefits

Instagram is expected to have higher net mobile display ad revenues than Google and Twitter by 2017

When Facebook reveals its third quarter earnings later today, it will all be about one word: advertising.It's where nearly all of the company's money comes from.

In the second quarter Facebook posted revenue of $4.04 billion, of which $3.8 billion came from advertising, an increase of 43% from the same quarter the year before. Mobile accounted for 76% of that revenue, up from approximately 62% of advertising revenue in the second quarter of 2013.

Here are some stats about the company's share of the digital and mobile ad markets worldwide an in the United States, supplied to VatorNews by market research company eMarketer. They show Facebook's share rising, while its closest competitor, Google, is starting to slip.

In 2014, Facebook accounted for 8 percent share of worldwide digital ad revenues, and is expected to reach 9.6 percent by the end of 2015. It still trails Google by a lot; that company is expected to remain the market leader with 30.4 percent share this year.

One good sign for Facebook, though, is that Google is losing share, and is expected to go down from 32 percent last year. So while there's a lot of ground to cover, Facebook is going in the right direction, and Google in the wrong one.

There is one piece of bad news for Facebook, and that is that the same cannot be said for mobile ad spending worldwide, where both companies are expected to a decline in marketshare this year. Facebook will drop to 17.4 percent from 17.5 percent this year, while Google will see a much larger drop to 33.7 percent, down from 38.4 percent in 2014.

In the United States, Facebook is poised to have a huge 2015, while Google continues to slip.

The company's share of US digital advertising is estimated to increase to 13.2 percent this year, up from 10.6 percent last year. Google, meanwhile, will see its share fall from 41.6 percent to 40.1 percent.

The same trend should happen in the digital display category, with Facebook's market share increasing to 29.3 percent, up from 25.1 percent last year, and Google's share of US display ad spending falling to 15.7 percent down from 16.4% in 2014. And with mobile ad dollars, where Facebook will see an increase to 19.4 percent, up from 18.5 percent, and Google will fall to 32.9 percent, down from 36.9 percent.

Instagram ad revenue

Facebook has never broken out Instagram revenue, but given the app's popularity, hitting 400 million users in September, there's obviously a lot of money to be made.

Instagram's worldwide ad revenue will be $600 million this year and is expected to see rapid growth, reaching $1.48 billion in 2016 and $2.81 billion in 2017, according to estimates from eMarketer.

Since Instagram's ad revenues are mobile-only, as it does not have a desktop-based ad product, Instagram will account for 5% of Facebook's worldwide mobile ad revenue this year and 14 percent of that total in 2017. In the US, Instagram will account for 10.7 percent of Facebook's mobile ad revenue in 2015 and 20.1 percent in 2016.

The vast majority of Instagram's revenue will come from in the United States, though, with only 8 percent, or $30 million, coming from international markets. That number will rise to 15 percent by 2017.

If eMarketer forecasts are correct, though, Instagram will have higher net mobile display ad revenues than both Google and Twitter by 2017. That has to make Facebook very happy.

(Image source: sproutsocial.com)