How Concerned is Google, Inc with Facebook, Inc? More Than You May Think.

By Markets Fool.com

At nearly $150 billion larger than Facebook as measured by market capitalization, Google is the undeniable leader in the fast-growing digital advertising space. Not to mention Google generated nearly five times the revenues last quarter -- $17.3 billion compared to $3.54 billion -- than "little" Facebook was able to garner.

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That said, it's not hard to find news from industry pundits pointing out how quickly Facebook is making up ground in the battle for digital marketing budgets. Based on yet another verbal salvo sent Facebook's way, it appears Google -- despite its size and revenue advantage -- has heard about enough. Which begs the question: Is the big boy on the block beginning to feel some heat?

He said what?
It was about a month ago when Google announced Q1 earnings. All-in-all, Google did in the first quarter what it usually does: grow its top line an impressive 12% in Q1, and improve both its GAAP (including one-time items) and non-GAAP earnings per share, or EPS. The usual concerns about its cost-per-click, or CPC, rates continued however, because mobile advertisers won't pay Google the same rates as they do on larger devices.

Included in Google's earnings announcement were a couple of swipes at Facebook. Google's chief business officer, Omid Kordestani, made a thinly veiled dig at Facebook collecting and utilizing its reams of user data to better target ads. Apparently Kordestani wasn't impressed, saying, "It's often more valuable to know someone is shopping for a new SUV, than it is to know basic demographic information about them." Whether Facebook's data is "basic" is up for debate, but Kordestani's point was clear.

Not exactly the makings of a turf war, but it's intriguing that a Google exec would even have Facebook on his mind during a quarterly conference call. Particularly when you take into account that Kordestani wasn't done. He went on to say the wonder of YouTube is advertisers on the site know that when users log into the video giant, it's to watch a video so they aren't "distracted by something else." Say, a Facebook "friend" perhaps?

And the fun continues
Investors were anxiously awaiting the release of video ads across the Facebook site, and this past quarter their patience was rewarded. Though Facebook wouldn't disclose video-specific revenues in Q1, COO Sheryl Sandberg did say that early results were very positive. She added that there are "four billion videos viewed daily" on Facebook, and that as users become more comfortable with the moving images, its video ads should produce at an even higher clip.

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Now fast-forward to last week, and another Google exec -- this time the head of its ad unit, Sridhar Ramaswamy -- decided to take a poke at Facebook, specifically those four billion daily video views.

Ramaswamy said in an interview with The Wall Street Journal that YouTube and Facebook are very different in measuring a video's popularity. Interestingly, there is no one standard to determine what is, or isn't, considered a "view." Facebook requires just three seconds of a user's attention to count a video as viewed, prompting Ramaswamy to ask, "How many of Facebook's video views are engaged views?" Good question, particularly when you consider that YouTube requires 30 seconds to elapse before content has been "viewed."

The difference in view metrics is certainly a legitimate beef, and Google has every right to question Facebook's video numbers. Of course, lobbing verbal bombs Facebook's way also lends credence to the perception that it's quickly become a thorn in Google's side, despite the disparity in size.

They say imitation is the sincerest form of flattery, but in the world of publicly traded companies, it could be argued that being on the receiving end of continuous barbs from your competition is. After all, if Facebook isn't a threat, than why would Google even bother to consider it? The notion that digital ad spend will total nearly $59 billion this year, almost $8 billion of which will be on mobile spots, likely has something to do with it.

There's a lot at stake, and with every passing shot at Facebook, Google is making it clear it sees the social media giant as a legitimate threat.

The article How Concerned is Google, Inc with Facebook, Inc? More Than You May Think. originally appeared on Fool.com.

Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends Facebook, Google (A shares), and Google (C shares). The Motley Fool owns shares of Facebook, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.