Google is the undisputed titan of online advertising, owning roughly 32% of digital advertising market share and generates more ad revenue than any other company. However, Facebook has emerged as a growing threat to Google, especially because of mobile.

Recently, Facebook announced a renewed focus on small and medium business at the kickoff event for its “Facebook Fit” tour in New York City. Facebook also announced new marketing tools at the event, such as the Lookalike Audiences that give companies the ability to upload customer information and have Facebook find people that match those data points.

Last year, Forrester Research conducted a survey that allowed marketers to choose the best among 17 online advertising opportunities. Nate Elliott, an analyst at Forrester, pointed out that Google held a spot toward the top of the list and Facebook was at the bottom. Elliott said that Facebook admitted to him late last year that they were only in close contact with a couple hundred marketers. So, he’s encouraged that they are running the Facebook Fit events with the notion of helping businesses use Facebook.

“This is literally the first meaningful attempt they’ve made to help SMBs figure out how to use the site,” Elliott said.

While there are roughly 30 million businesses on Facebook, only 1 million are advertising there. While that may seem disparate or pale in comparison to the total number of AdWords customers, I would have to agree with ZDNet’s Larry Dignan when he pointed out, “Generally speaking, Google has a larger slice of the advertising pie, but Facebook has a faster growth rate — especially on mobile.”

For Facebook to eat into Google’s market share, it will depend on the answers to these two questions:

  1. Can Facebook build better self-serve advertising tools than Google?
  2. Can Facebook’s ads drive better click-through and conversion rates than Google’s ads?

While reports show Facebook gaining mobile ad revenue share and even some digital ad revenue share, this is partly due to the fact that Google’s ad revenue has historically been the largest share of ad revenue, offset by other companies like Yahoo and Twitter that take up a few percentage points here and there.

If we take a look at the revenue comparison between Google and Facebook, it’s clear that Facebook has miles to go before it can be considered a true threat to Google’s advertising business.

In 2013, Google made nearly $51 billion from advertising alone. Facebook, on the other hand, netted a little over $2 billion from in advertising revenue. Still, looking at the ad revenue growth from 2010 – 2013 we see that Google’s ad revenue grew 79% while Facebook’s ad revenue grew 257%

Elliott said Facebook has more users, generates more page views, and creates more time spent; and even have as much data as Google does. Even so, they aren’t able to do what Google does in turning that data into value for marketers and SMBs.

Elliott calls Google’s collected data a database of intentions, while he refers to Facebook’s data as a database of affinity. According to Elliott the main problem is that Facebook’s data isn’t a good fit for direct marketing, but they keep trying to use it for direct marketing.

“The data that Google has lives much closer to the point of purchase than the data that Facebook has. And, that’s one reason that buying ads from Google tends to make marketers happier than buying ads from Facebook,” Elliott said.

With that being said, Altimeter Group analyst Rebecca Lieb said she believes that Facebook is a competitor to Google, but they have very different core offerings.

“It’s like Godzilla and Mothra,” Lieb said. “They’re both monsters on the landscape, but they’re not the same monster. There’s, presumably, room for both of them to coexist. They’re competing for advertising dollars, but not with the same products and not with the same services.”

According to Lieb, what Facebook did at the Facebook Fit announcement is the same thing that companies like Google and Yahoo did when they were starting out as they evolved into major players. According to Lieb they initially appealed to large enterprise companies and small mom-and-pop companies, and then grew to engage the SMB market. As noted by the percentage change in advertising revenue to total revenue, Facebook’s revenue model is very similar to Google’s. This is partly because Facebook’s annual revenue from other fees hovers around $200 – $250 million.

Lieb said Google dominates with paid search, while Facebook doesn’t have a direct product to compete. Facebook, on the other hand, dominates social media advertising while Google has barely scratched the surface with Google+, and haven’t found a way to significantly monetize it. As Lieb notes, certain products or services wouldn’t translate across the two platforms.

“An embarrassing drugstore product, say diarrhea relief. You wouldn’t want to buy or interact with that brand socially on Facebook, because it’s embarrassing. But, you would search for it on Google,” Lieb said.

Regardless of the the tools they use to get there, they are both going after the same advertising dollars. Elliott has a decidedly different take on Google and Facebook. He said that they are directly competing and that social media doesn’t play as big of a role in Facebook’s model.

“They are targeting the same audience with virtually the same products. I mean, Facebook’s self-service ad tool is effectively a knock-off of AdWords,” Elliott said. Adding, “Don’t be fooled into thinking that Facebook makes money from social advertising or social marketing. Facebook makes money from display ads. It’s a banner ad seller.”

If the ad skirmishes will be fought over display advertising, then Google is ahead of Facebook on that front too. As Elliott notes, “The Google display network, as of 18 months ago, was doing more revenue per quarter than Facebook’s entire ad business.”

More than 90% of Google’s revenue comes from advertising. No matter how directly the two companies are competing, the fact that of the matter is that Facebook is attracting attention and growing market share and revenue as an ad seller. That makes it a significant long-term threat to Google, even if its revenue numbers are dwarfed in the short term.