Google Bests Facebook for Ad Revenue; Microsoft Widens Use of Teams Service -- Tech Roundup

Observers of social media and other online services companies have considered revenue generated from advertising a key to the companies long-term success. 

A report by the research group eMarketer has found that no company is likely to do better in this regard than Alphabet   (GOOG)  . The search engine company will earn more than double the U.S. ad revenue of its closest competitor, Facebook (FB) . 

Google is projected to generate more than 40% of the total domestic digital ad market. That comes as a rapidly increasing number of Americans rely their mobile phones to search for information and to manage their lives. 

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eMarketer analyst Monica Peart said "consumers" are turning to their smartphones to look up everything from the details of a product to directions."

"Google and mobile search as a whole will continue to benefit from this behavioral shift," she added.

Still, the report found that Facebook is beating Google and major social media platforms in display advertising, garnering a nearly 40% market U.S. market share. 

That reflects consumers' growing use of Facebook and is vindication of the company's strategy to become a central part of people's lives. Over the last few years, the company has pushed to include more engaging content, particularly video, which tends to draw users and keep them returning. Facebook 

The company has also benefited from its acquisition of Instagram. The photo sharing service will produce about 20% of Facebook's mobile revenue this year. That's up from 15%, Peart said. 

Google's display ad revenue will drop to 13% this year. 

Meanwhile, Twitter  (TWTR) will continue to struggle generating enough ad revenue. The company has been hotly criticized for its inability to draw ad dollars, despite the major role it plays for celebrities to reach wide swathes of the public. Twitter fired its previous CEO, Dick Costolo, largely for his inability to solve the ad revenue challenge. Founder Jack Dorsey has been unable to do much better since returning as CEO. eMarketer, which said it had "significantly lowered its U.S. outlook for Twitter this year, based on flat user growth and guidance from the company."

The company's domestic ad revenue will fall about 5% this year, and its U.S. digital ad Market will continue languishing below 2%. 

Alphabet and Twitter shares rose slightly in Tuesday trading, while Facebook shares fell slightly. 

Microsoft  (MSFT) will be making its business communications and collaboration platform, Teams, more broadly available in an effort to challenge Slack, the leader in this burgeoning space. 

The company is integrating with third-party business communication services companies like Zendesk and Hootsuite, along with providing chat, security and other services that Slack also offers. 

The app is free to the company's 85 million users of Microsoft 365, its cloud-based service that provides access to office applications and related tools. 

Microsoft has enjoyed a favorable response to Teams since introducing the service late last year on a limited basis. The company says that more than 50,000 organizations have tried out the service, including such big brands as Accenture, Deloitte, Alaska Airlines, Trek Bicycle and Conoco Phillips (COP)

The number of people who use the service within an organization may range from a few to larger groups. 

On Monday, Okta filed for a $100 million IPO.

The eight-year-old, San Francisco-based company provides identity security services that lowers the risk for users connecting with multiple devices. Okta counts Adobe and LinkedIn among its highest profile customers. It lost more than $76 million last year and doesn't expect to turn a profit "for the foreseeable future," an SEC filing said, but the company's revenue doubled last year. 

The filing is part of a small uptick in technology IPO activity that follows a sluggish 2016. 

New York-based Yext announced its own $100 million IPO on Monday. The company helps clients maintain their listings on search engines and related services. Yext closed a $50 million round of funding in 2014 and at the time was valued at $525 million. 

Meanwhile, Mulesoft is expected to have its own IPO on Friday. The San Francisco-based startup's software helps users connect applications, data and devices in one network. The company hopes to raise $239 million. 

At the beginning of the month, the message and photo sharing service Snap had its trading debut. Shares rose 44% above its IPO price but have fallen 27% since then. Snap closed Tuesday trading at $20.58 a share.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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