Fiber Is a Strategic Weapon and Google Inc (GOOG) Knows It

Re-targeting is the technique of showing ads to people after they visited a specific site. This exact level of accuracy allows marketers to target people with a higher possibility of purchasing. Facebook can charge very high rates for this product. Even though the technology has been available for many years, Facebook Inc (NASDAQ:FB) just introduced their re-targeting product in the latter half of 2012. The fact that it took so long for re-targeting to be introduced shows just how young and under-developed Facebook is.

Strategically and financially Google Inc (NASDAQ:GOOG) is in a better position than Facebook Inc (NASDAQ:FB). Facebook owns the world’s premier social network, but its EBIT margin of 10.7% and return on investment of 0.4% are very low. Google is a larger company with experience as an ISP, an ad network, a search engine, and a social network. It offers an EBIT margin of 26.8% and a return on investment of 14.4%. In the latter half of 2012 relative to the first half, Google’s revenue grew by 19.5% while Facebook’s revenue growth was a few points ahead at 26.8%.

Conclusion

With Google Fiber, Google Inc (NASDAQ:GOOG) is taking a page out of Comcast Corporation (NASDAQ:CMCSA)’s playbook. The internet innovator is able to control the delivery of content from the local internet connection all the way to the publisher. In the long run Comcast is a questionable investment as it continues to punish innovative consumers who prefer to consume their content online. A look at Facebook Inc (NASDAQ:FB)shows that it is also a secondary investment when compared to Google. Facebook’s revenue growth is strong, but Google Inc (NASDAQ:GOOG) offers stronger margins with healthy growth.

Joshua Bondy has no position in any stocks mentioned. The Motley Fool recommends Facebook and Google. The Motley Fool owns shares of Facebook and Google.