Google Could Steal Facebook's Thunder

 | Jul 30, 2013 | 12:38 PM EDT
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I don't know if people realize that Google (GOOG) is like Facebook (FB) a quarter ago. Right now, the geniuses at Google -- and they are geniuses -- are trying to think of ways to make more money from advertising, and the Publicis-Omnicom deal gives me faith that they will figure out it.

Right now, the situation is kind of amazing. Facebook has figured out how to design programs that are just like what television offers: national ads for the national programs with local ads for the local affiliates, except they own them both.

Now, Google has its own programming and its own ad-serving system, and the great thing about the latter is also the bad thing: Google gives the advertiser a bargain but hurts the content providers, including itself. Unless you have a proprietary product with a proprietary ad sales force to sell that product in a way that can't be compromised by what's known as programmatic selling -- a cheap form of advertising in which you carpet-bomb every site imaginable, and the purveyors of the sites are offered a take-it-or-leave-it deal, and most take it -- you aren't going to make as much money as you should.

Incredibly, Google has created a monster here that only Facebook right now is immune to, hence the incredible run that Facebook is having.

But Google said it is just a quarter behind in doing this itself. Why should we not take Google at its word? I believe it has the smarts to figure this out.

That's why, even as Facebook soars here, I believe Google at this point is the better buy. Yes, you may have to buy it in a stock-replacement way, using deep-in-the-money calls to get some bang for the buck, but right now there is no doubt in my mind that it is the cheaper stock to own, if you are willing to own it until the next quarter is reported.

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