As Online Holiday Sales Increase, Facebook Looks Better and Better

Jacob Harper  |

On Dec. 16 it was revealed that Amazon (AMZN) was besting brick-and-mortar giants like Toys ‘R Us to become the number one seller of toys going into the holiday season. This is no surprise – the smashing online business done on this year’s Black Friday (and Cyber Monday) confirmed a trend techsters have long predicted. Holiday shopping is moving online, and brick-and-mortar chains that are failing to adapt will be left in the dust.

Of course, this is good news for the online-only Amazon, and big box chains that have adapted well like Best Buy (BBY) . But this also signals that Facebook (FB) , one of the top mega-cap performers on the year, has a rosy future as well.

Targeted Advertising is Facebook’s Savior

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Facebook’s growth among the youth market is slowing, a fact that was worrying enough to some investors as to cause the company’s stock to plummet after an otherwise healthy third quarter earnings report. However, lack of the quantity of user growth should not worry investors. The amount of revenue Facebook is squeezing out of existing users via targeted advertising is more than making up the difference, and as Amazon and the like take advantage of Facebook’s massive stores of user data, the company will continue growing in the most important arena: revenue.

Facebook: Learning What Customers Really Want

Amazon has found an amazing consumer research firm in Facebook. And Facebook has found their fifth biggest customer in Amazon at $30 million per annum in sales. That number is expected to grow, as Amazon is expected to join Facebook’s ad serving platform.

The two companies are forming a highly symbiotic relationship. Amazon gets traffic from people “liking” or sharing products, Facebook gets an increasingly large amount of ad revenue.

That revenue share, from Amazon and other online retailers, will be growing for the foreseeable future. Facebook is expected to amp up targeted advertising significantly as Christmas draws near.

Facebook bears assume that increasingly intrusive advertising will drive users away. However, that so far has not been the case, and the increased revenue is more than offsetting the small amount of users who have left the site permanently.

The future of shopping looks to be in online retailers, with companies like Amazon shining through. As Amazon rises, so does their favorite social media advertising partner.

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