It pays to be social, not Yahoo, in US digital display ad biz

The US display ad business is set for a sizable shift this year as the once potent Yahoo slips even further, according to new data from research firm eMarketer.

Facebook is on pace to nearly double the display advertising revenue generated by Google in the US this year, earning a whopping $6.8 billion compared to the search giant's $3.5 billion, eMarketer reported Thursday. Facebook will own 25 percent of the US display ad business, compared to Google's 13 percent. By 2017, Facebook's ad revenue will jump to $10 billion, giving it 27 percent share of the space. Google will top out at $4.1 billion and 11 percent share, according to eMarketer.

Display advertising is categorized as ads that appear on computers, mobile phones and tablets. The category comprises banner ads, sponsorships, video, Facebook News Feed ads and other formats, according to the eMarketer study. The revenue is netted against payments made to partner sites displaying the ads on the companies' behalf.

Facebook's control over digital display ads is nothing new -- it's been leading Google for years -- but one surprise from the eMarketer study centered on Twitter and Yahoo. According to the company, Twitter will become the third-largest display ad company in 2015, generating $1.3 billion this year, compared to Yahoo's $1.2 billion. The research firm anticipates that Twitter's year-over-year ad revenue growth will reach 62.1 percent this year, while Yahoo's revenue will be up just 1 percent.

The possibility of Twitter beating the once dominant force in online ads, Yahoo, is a piece of good news for a social network that has been hemorrhaging cash for years. Last year, Twitter lost $577.8 million, down slightly from the $645 million it lost in 2013.

Two-thirds of Twitter's revenue comes from the US, despite three-quarters of its user base living internationally. For its part, Twitter has said that it has plans to grow its international revenue and announced earlier this month that it has opened a Hong Kong office to find businesses willing to advertise on its service in China and other parts of Asia. The move demonstrated how important China has become to most Web companies, including Twitter, even though the tweet-happy company is banned in the country.

Twitter's success and move into third place in display ads this year is yet more sobering news for Yahoo, which once upon a time led in that field year after year. By 2011, however, the bottom fell out as Google and Facebook took over and haven't looked back.

In 2014, Yahoo's revenue was down 4 percent to $1.9 billion worldwide compared to the prior year. Meanwhile, Yahoo had slipped below Microsoft to become the fourth-largest display ad company in the world, according to eMarketer. Google and Facebook lead the space globally.

Despite Yahoo's troubles, CEO Marissa Mayer, who in a previous role was instrumental in helping Google grow its businesses and thus, advertising dollars, has been trying her best to turn the tide. The company has made a series of moves over the last several months, including acquiring mobile-analytics firm Flurry in August, restructuring its ad team, and hiring former Amazon sales executive Lisa Utzschneider to head its Americas sales business. Yahoo in November acquired Brightroll for $640 million to help its customers more easily buy video ads.

Although Mayer has argued that the moves will greatly enhance Yahoo's ad business, eMarketer isn't so sure. The company said Thursday that by 2017, Yahoo's display ad revenues will be just $1.29 billion -- half of Twitter's and a tenth of the revenue Facebook is expected to generate that year. Yahoo will own just 3.5 percent of the display ad space in 2017, eMarketer said.

"Even though we project Yahoo to see positive display ad growth this year for the first time since we started tracking the company's ad revenues in 2009, its market share will continue on a rapid decline, falling to 4.6% in 2015, down from 5.5% last year and 7.2% in 2013," eMarketer said in a statement.

The key element in the success of companies like Facebook and Twitter has been their mobile presence. According to eMarketer, for the first time in 2015, mobile will surpass desktop in total advertising spending, hitting $14.7 billion, compared to $12.4 billion on the desktop side. Facebook's mobile revenue will reach $4.9 billion this year and leap to $7.5 billion in 2017, eMarketer said. Twitter's mobile ad revenue will nearly double from $1.2 billion this year to $2.3 billion in 2017.

Neither Yahoo nor Twitter immediately responded to a request for comment.