From the SMW archive. Originally published June 21, 2011. This article is preserved as a historical record — facts, figures, and market context reflect 2011.

Facebook Leads Display Advertisement

By Ed Liston · June 21, 2011

Facebook Inc. has successfully overtaken Yahoo! Inc. as the leading online display advertiser in 2011 with more than $2.2 billion in advertising revenue and in the process also collecting the largest slice of online display in history according to a new study.

The advertising revenue generated by Facebook will give it a 17.7 percent market share in the online graphic display advertising market for websites. The report about Facebook leading Yahoo Inc. was released on Monday by online research firm eMarketer.

According to online display reports from last year, Facebook held a 12.2 percent market share in the United States. The latest figures are a sign of the growing dominance of Facebook on the online internet space by using its position as the number one Internet social network. Facebook in the past two years has seen its market valuation soar by more than $80 billion. Many investors believe that Facebook will unveil an Initial Public Offering next year, which might lead to a $100 billion valuation for the social networking site.

According to data released by the online research firm eMarketer the overall market for online display ads, web page sponsorships, video ads and banner ads is growing so fast that it is benefiting multiple online advertisement companies. Both international brands and local businesses are turning towards the web to subscribe for online display advertisements in attempts to market their services and products.

Competition between internet companies such as Google Inc. (NASDAQ:GOOG), Yahoo! Inc. (NASDAQ:YHOO) and Microsoft Corp. (NASDAQ:MSFT) has increased with each offering new offers that are designed to attract online advertisers. New competitors in the market like Groupon are offering new marketing alternatives to the traditional online display advertising.

According to eMarketer, Yahoo! Inc. is set to add more than 13.6 percent to its online display business. However the growth of Yahoo! Inc. will lag the overall average growth in the United States at 24.5 percent. Google is set to gain a market of 34.4 percent this year with overall revenue of $1.15 billion. Google is increasing its efforts to grow rapidly in the display advertising business up from the traditional text only advertisements. Google generates a vast amount of its overall revenue from text only advertisements.

Google announced last week the acquisition of AdMeld in order to make it easier for web publishers to sell online display advertisements on their site.

Ed Liston was a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guided an independent team of experienced analysts and wrote for multiple stock trader publications.