google-ad-vs-facebook-ad

Google Ad vs. Facebook Ad

Advertising Revenues20172018201920202021
Google Search & other$69.8B$85.3B$98.1B$104B$149B
YouTube ads$8.15B$11.15B$15.15B$19.77B$28.85B
Google Network$17.6B$20B$21.55B$23B$31.7B
Meta (Facebook) Ad Revenues$39.94B$55B$70B$84.8B$115.65B

While Google and Facebook rely on advertising as the primary source of revenue, they are two completely different business models.

Both are attention-based or attention merchants, yet there are many key differences.

attention-business-models-compared
In an asymmetric business model, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus having a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility. This is how attention merchants make monetize their business models.

In which ways Google and Facebook are different?

Advertising: Google is search-based, whereas Facebook is feed-based

In short, on Google, you get advertising based on searches that users input into it.

Compared to the feed, search is a pull mechanism, where Google needs to interpret the intent behind the users’ search to serve ads properly.

On the other hand, for Facebook, the ad machine works by pushing relevant ads to users in their feeds.

It’s important to highlight that also Google has changed a lot in the last few years. And today, in many cases (like Google Discover, and YouTube), also Google’s advertising is more similar to that of Facebook.

Vertical Integration: whereas Google is vertically integrated, owning the whole data supply chain, Facebook is not

In fact, Google has successfully built over the years its supply chain, starting from the operating system (Android), browser (Chrome), and tools (Google search and others) to power up the whole ecosystem.

In addition to that, Google now has also a successful line of hardware products, its Pixel phones, which represent a further step in controlling the supply chain of data.

In fact, by having its smartphones in the hands of millions of people, Google can enhance the distribution of its products and speed up the testing of new products.

On the contrary, Facebook has never built a successful smartphone or hardware for consumers.

This is quite limiting and the reason why Facebook has been pushing toward the Metaverse, with the hope of building a valuable device for VR.

That only happened in part with the acquisition of Oculus, which as of now, though, is more of a gaming console than else.

Cost Structure: Google shares revenues, Facebook does not

In fact, even though most of Google’s revenues come from its properties, Google also has a network for publishers (AdSense) that shares revenues with them.

In addition, YouTube, part of Google’s family of products, also has a mechanism of revenue sharing with creators, which enabled a whole ecosystem to thrive and become stronger and stronger over the years.

This wasn’t true for Facebook, which enjoyed wider margins than Google over the years, as it didn’t share revenues with its creators; over time, this went against the company.

In the current scenario, where a competitor offers more opportunities to creators to monetize their content, many might flock to an alternative platform.

Read Next: Google Business Model, Google Subsidiaries, What Happened To Google Glass?, What happened to Google Plus?, How does Google Maps make money?, Who Owns Google?, How Does YouTube Make Money?, History of Youtube, How Do YouTubers Make Money?

Related Business Models

Mark Zuckerberg Empire

who-owns-facebook
Mark Zuckerberg is the principal shareholder of the company. Not only he retains ownership and control of the company. Facebook, like Google, has issued two kinds of common stocks, Class A and Class B. Where the holders of Class B common stocks are entitled to ten votes per share, and holders of our Class A common stocks are entitled to one vote per share. Mark Zuckerberg has a total voting power of 57.9%. 

Attention-Merchants Business Model

attention-business-models-compared
In an asymmetric business model, the organization doesn’t monetize the user directly. Still, it leverages the data users provide and technology, thus having a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data and its algorithms sold to advertisers for visibility. This is how attention merchants make monetize their business models.

Asymmetric Business Model

asymmetric-business-models
In an asymmetric business model, the organization doesn’t monetize the user directly. Still, it leverages the data users provide and technology, thus having a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data and its algorithms sold to advertisers for visibility.

Facebook Business Model

facebook-business-model
Facebook, the main product of Meta, is an attention merchant. As such, its algorithms condense the attention of over 2.91 billion monthly active users as of June 2021. Meta generated $117.9 billion in revenues, in 2021, of which $114.9 billion was from advertising (97.4% of the total revenues) and over $2.2 billion from Reality Labs (the augmented and virtual reality products arm). 

Facebook ARPU

facebook-arpu
The ARPU, or average revenue per user, is a key metric to track the success of Facebook – now Meta – family of products. For instance, by the end of 2021, Meta’s ARPU worldwide was $11.57. While in US & Canada, it was $60.57, in Europe, it was $19.68, in Asia $4.89, and in the rest of the world, it was $3.43.

Facebook Organizational Structure

facebook-organizational-structure
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organizational structure is organized around the leadership of Mark Zuckerberg and the key executives around him. On the other hand, the function-based teams are based on the main corporate functions (like HR, product management, investor relations, and so on).

Metaverse Supply Chain

facebook-metaverse

Google Business Model

hidden-revenue-model-google
A hidden revenue business model is a pattern for revenue generation that keeps users out of the equation, so they don’t pay for the service or product offered. For instance, Google’s users don’t pay for the search engine. Instead, the revenue streams come from advertising money spent by businesses bidding on keywords.

TikTok Business Model

tiktok-business-model
TikTok is a Chinese creative social media platform driven by short-form video content enabling users to interact and generate content at scale. TikTok primarily makes money through advertising, and it generated $4.6 billion in advertising revenues in 2021, thus making it among the most popular attention-based business models or attention merchants.

Instagram Business Model

instagram-business-model
Instagram makes money via visual advertising. As part of Facebook products, the company generates revenues for Facebook Inc.’s overall business model. Acquired by Facebook for a billion dollars in 2012, today Instagram is integrated into the overall Facebook business strategy. In 2018, Instagram founders, Kevin Systrom and Mike Krieger left the company, as Facebook pushed toward tighter integration of the two platforms.

YouTube Business Model

how-does-youtube-make-money
YouTube was acquired for almost $1.7 billion in 2006 by Google. It makes money through advertising and subscription revenues. YouTube advertising network is part of Google Ads, and it generated more than $28B in revenue by 2021. YouTube also makes money with its paid memberships and premium content.

Twitter Business Model

how-does-twitter-make-money
Twitter makes money in two ways: advertising and data licensing. In 2021, Twitter generated $4.5 billion from advertising and $570 million from data licensing. While Twitter generated $5 billion in total revenues, it lost 221 million.
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