Ross Sandler of RBC has done what every good analyst should do, which is say something interesting. What Ross has said is that, at its current growth rate, Facebook will surpass Google in size by 2011-2012.
(We expect Facebook’s growth will slow more rapidly than Ross thinks, but the comparison is still startling.)
Ross also illustrates how important Facebook has become to Google as a traffic source. Fully 19% of Google sessions now come from Facebook, up from 9% a year ago. At the very least, this will likely give Facebook the leverage to negotiate a sweet referral deal at some point.
(How annoying it must be for Microsoft, which is paying Facebook, to watch the company send all that traffic to Google).
Facebook does have a big problem relative to Google, which is that it doesn’t have a business model. Yahoo still holds its own against Google on a global user basis, but no one is accusing Yahoo of being a threat to Google.
Still, size matters, and Facebook continues to take the world by storm. So Ross’s observations are important.
Ross’s key points:
Facebook is actually positive and complementary for Google thus far, but that could change if Facebook’s rapid growth trajectory continues on its current path, or if/when social media can find a business model and attract ad dollars from other online media.
At the very least, we think Facebook as the “starting point” for more and more users on the Internet could create some multiple compression for Google over time, if the momentum continues.
Our key findings are as follows:
Complementary (For Now): Google and Facebook are two of the fastest growing and largest companies on the internet, and thus far, Facebook’s ascendancy has likely helped Google gain share. 45% of monthly unique users go directly to Facebook (as a starting page), up from 39% a year ago. At the same time, Google is now driving 64% of Facebook’s uniques, up from 51% a year ago. Google.com, on the other hand, has a consistent 66% of its uniques as a starting page, same as a year ago. Google’s uniques via Facebook are growing at 188% y/y, and now represent 19% of Google’s traffic (up from 9% 12-months ago).
Facebook Actually Boosting Google’s Share: Facebook’s incremental uniques going to Google.com are 50% greater than incremental uniques going to Microsoft and 250% greater than those going to Yahoo. Facebook’s growth is actually helping boost Google’s search share vs. the other engines. This staggering statistic alone is likely central to all future negotiations for Facebook monetization deals, whether
it is with Google, Microsoft, or Yahoo.
Facebook Could Surpass Google In 2011/2012: If we assume modest deceleration in growth for both sites (an 85% CAGR for Facebook and a 20% CAGR for Google), Facebook could surpass Google in terms of total worldwide uniques, by late-2011 or early-2012.
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