Meta Platforms is expected to surpass Alphabet’s Google to become the world’s leading digital-advertising business, a first for the social-media company.
Advertising research firm Emarketer projects that Meta will surpass Google in net ad revenue this year, reaching over $243.46 billion, edging past Google’s $239.54 billion. The research firm’s estimates account for revenue after deducting traffic and other content acquisition costs, such as the money Google shares with its creators.
Meta’s ad business is seeing a lift, thanks to the success of new ad offerings, including the short-form video format Reels, and the broader boost that artificial intelligence has provided.
Meta has demonstrated “incredible patience” in establishing substantial user habits for products like Reels, the microblogging site Threads and the messaging platform WhatsApp before eventually introducing advertisements, according to Max Willens, a principal analyst at the research firm.
Worldwide ad growth for Meta is expected to rise from 22.1% in 2025 to 24.1% this year, Emarketer estimates. The projection is particularly notable because analysts consider Meta’s recent ad growth unprecedented, especially given that they expected Meta’s growth would slow given its scale. Google’s global growth rate is projected to remain flat at 11.9% this year.
A spokeswoman for Google declined to comment. Meta also declined to comment.
Meta’s AI recommendation system boosted Reels watch time in the U.S. by more than 30% during the most recent quarter, compared with a year earlier, the company said, enabling the platform to serve up more ads. Meta said that Reels is on track to make $50 billion over the next 12 months, The Wall Street Journal reported.
AI is also fundamentally changing how some advertisers create the ads that run across Meta-owned sites. Meta recently said the revenue run rate of video-generation tools hit $10 billion in the fourth quarter.
To be sure, this surging AI-enhanced performance comes with a steep price tag; Meta’s capital spending is expected to reach $135 billion this year.
Google’s ad business encompasses its dominant search platform, YouTube, the Google Network, which runs ads on third-party websites, and other ad initiatives.
While Google has long maintained a tight grip on the highly profitable search business, it faces increasing competition, with rivals like Amazon.com taking some market share. This is partly because many consumers now begin their product searches directly on the e-commerce platform.
Google’s share of the U.S. search ad market is expected to be 48.5% this year, the first time it has fallen below 50% in over a decade, Emarketer said. Moreover, newer players, including AI companies like OpenAI and social-media companies such as TikTok, are expected to reshape the search market in the years to come.
The highly diversified business model of Google also acts as a double-edged sword for ad growth. Google’s ad-revenue growth is limited because YouTube Premium, while generating tens of billions in subscription revenue, prevents a large number of users from being monetized through ads.
Despite the shift at the top of the digital-ad business, the broader ad market continues to consolidate around a handful of players. The oligopoly of Meta, Google and Amazon is expected to strengthen its dominance in the global digital-advertising market this year. Those companies’ combined market share is projected to rise to 62.3%, up from 59.9% last year, signaling a tightening grip on the digital-ad business, Emarketer said.
Write to Suzanne Vranica at Suzanne.Vranica@wsj.com