How Facebook Atlas Poses a Huge Threat to Yahoo!’s Already Flagging Display Business
SAN DIEGO, CALIF. (TheStreet) -- With the release of  Atlas, Facebook ( FB) has shined an even brighter light on the pockmarks of Yahoo!'s  ( YHOO) display advertising business, which has been in decline for years.

Facebook Monday unveiled its much-anticipated ad platform as an answer for advertisers who want something better than the web-restricted cookie to track and target ads. Atlas, by comparison, can follow Facebook members where they digitally roam, on or off the social network, from web to smartphone, smartphone to tablet.

Read More: Yahoo! Back in the News Because of Activist Investor : What Wall Street's Saying

Watch the video below for more on Facebook's Atlas ad service:

With Atlas, advertisers can create, buy, and track digital campaigns across devices and websites; connect the dots between online behaviors and offline purchases; and target their ads using Facebook's treasure trove of data. The combination has the chance to shake up the status quo in the display ad business, Nomura Internet Analyst Anthony DiClemente told TheStreet.

That spells even more trouble for Yahoo!'s display business, which is already stuck in a digital quagmire of needing to convince advertisers to buy more display ads to make up for dwindling ad prices. In the second quarter, Yahoo!'s display revenue fell off 8% from the same period a year ago, even though the company sold 24% more display ads. Even Yahoo! Chief Marissa Mayer characterized the company's Q2 display results as unsatisfactory in the earnings press release.

As Altimeter Industry Analyst Rebecca Lieb sees it, Atlas offers a compelling enough argument for advertisers to spend more of their budgets with Facebook -- and less with Yahoo by proxy. And DiClemente expects Facebook's dense targeting and tracking options to boost advertiser's return on investment, which would drive up CPMs (cost per one thousand impressions) as a result.

In short, if Atlas proves successful, Facebook could steal display ad market share from older ad networks like Yahoo, and, adding insult to injury, do so at premium rates.

"Facebook, as a social network, has such deep data on its users that it can be an incredibly valuable source of data for targeting on the web," Lieb said. Facebook, now with Atlas, has the edge over Yahoo, she added.

In the second quarter, Facebook generated $2.91 billion in revenue, with $2.68 billion of that coming from advertising, an increase of 67% year over year. Mobile advertising revenue rose rose 41% year over year, accounting for 62% of total advertising sales, coming in at $1.66 billion.

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