Who Will Ultimately Benefit Facebook Inc. (NASDAQ:FB) Or Google (NASDAQ:GOOG)?

Posted by Lynn Eisler October 20, 2013 0 Comment 3565 views

In a deal that is being portrayed as one of the biggest kiss and make up acts ever witnessed among over $100 billion market capitalized giants, Facebook, Inc. (NASDAQ:FB) and Google (NASDAQ:GOOG)  have announced that they have signed off on a strategic agreement. The deal will enable the two tech giants who have brought about a paradigm shift in social media marketing to pool in their marketing resources which will in turn earn more revenue for both companies.

To bring readers up to speed one need to explain that since the launch of its advertising exchange platform in 2012, Facebook has been backing away from allowing Google to participate on it. The exchange platform had been conceptualized by the former as a tool to monetize its ever growing user base by offering a platform for paying advertisers to reach target customers among its user base.

Google announced on October 18 that on the solemnization of the deal, its “DoubleClick Bid Manager” will be able to access and place advertisements on Facebook Exchange. Google has successfully positioned its “DoubleClick Bid Manager” as a single stop shop for advertisers. Using this software, paying customers can buy and display advertisement space on other online portals and websites. Google was able to achieve this by encouraging ad exchanges between the various websites and it acting as an administrator of these exchanges. In return Google was able to receive recurring royalty from the various websites.

In related news, a website which tracks developments in the advertisement industry called AdExchanger.com has reported that Facebook has entered into a similar arrangement with Amazon.com recently. This will allow Amazon’s ad exchange service to tap into FB ad exchange. If this report turns out to be correct, then it would mark a course change on part of Facebook. It will indicate that Facebook has decided to co-opt competition and grow the total addressable market rather than restrict itself to its own user base.

About Lynn Eisler

Lynn Eisler is a national news reporter focusing on economic issues, data analysis and the financial health of state and local governments. Lynn has been honored with the H.L. Mencken Award for Investigative Reporting, the Champion of Justice Award for reporting on the drug war, and the John Hancock Award for business reporting. Lynn was also a Knight Medical School Fellow at the University of Michigan.

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