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Google Is Helping Facebook Steal Ad Revenue From Yahoo and The New York Times

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Redesign of Gmail will mean email campaigns are going to be less effective:

Google's recent redesign of Gmail — which shunts "promotional" email into a special folder rather than letting it clutter your inbox — is working to Facebook's advantage, according to UBS Investment Research analysts Eric J. Sheridan, Vishal J. Patel and Timothy E. Chiodo.

The UBS team believes that the Gmail change will reduce the effectiveness of email marketing — spam, to you and me — and that marketing budgets will thus transfer to Facebook, which allows brands to serve display ads to users targeted off their email addresses.

Coupled with Facebook's new, yet-to-be-launched, video ad product, that could propel Facebook's revenues to as much as $9.14 billion in 2014, UBS said in a note to investors. 2013 revenue is expected to be ~$6 billion.

The losers will be Yahoo, The New York Times and ValueClick, the UBS folks believe.

Facebook Monetization

The first part of their extremely bullish case for Facebook is that despite the social network's roaring business, it's still nowhere near its potential ad-carrying capacity:

"Based on our estimates, while Facebook currently generates more revenue per user than Yahoo or AOL, it is still significantly undermonetized vs. Google, its largest advertising peer. This differential is especially stark given traffic data showing users spend a comparable amount of time on Facebook as they do on Google’s sites. Specifically, our analysis shows that Facebook has ~4x headroom before it is monetizing its users at the same rate."

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