The duopoly still dominates, but it’s facing its limits
For years, there seemed to be no end to Google and Facebook’s growing dominance in the digital ad market. Now, there are flickers of light at the end of the tunnel.
EMarketer made headlines when it predicted in March that Google and Facebook would lose share for the first time this year as Amazon and Snap were growing faster than expected. The forecast was an adjustment from September, when eMarketer predicted that Google and Facebook would grow share slightly this year.
The Interactive Advertising Bureau issued a report May 10 that reinforced that notion. Its latest Internet Advertising Revenue Report indicated that even though total U.S. digital ad spend hit a record $88 billion last year, up 21 percent year over year, there are limits to the duopoly’s business models. The IAB doesn’t break out individual companies, but it said search advertising’s share of the market declined to 46.2 percent in 2017 from 47.7 percent in 2016, and social media, with one-fourth of the market, is maturing.
“We see growth for both, but for Google, we don’t expect it to be double that of the market at this point, and for Facebook, the growth rate was very strong for Q1, but we do expect a gradual slowdown,” said Martin Utreras, vp of forecasting at eMarketer. “In general, we see it as positive news. Having more competition is always good for the consumer and advertiser.”
Google declined to comment. Facebook didn’t comment by deadline.
Amazon and Snapchat tend to get most of the credit for the duopoly’s share erosion. Amazon’s digital advertising has been growing faster, although from a smaller base. Amazon’s big selling point is that it knows what people actually buy, not just (in Google’s case) what they’re searching for. And Amazon dominates the voice device market, so it’s well-positioned to deliver voice ads. Utreras said Amazon’s strong first quarter might warrant an even stronger case for its gaining market share. Snap is also chipping away at the market share, too. Even though the private-messaging app company is having a rocky start to the year, it’s still growing and has a track record of experimenting, and at age 7 (seven years Facebook’s junior), it has time to hone its approach.
It’s not just Amazon and Snap. Last year was the first time that digital ad revenues have overtaken television (broadcast and cable combined) as TV’s share slipped, according to the IAB report, which PwC US prepared. Not all those dollars are going into Google’s and Facebook’s pockets. TV’s share is coming at the expense of over-the-top video’s growth. Some of that is going to Google-owned YouTube, but Roku and Hulu also are sharing in the spoils, which are indirectly benefiting the traditional media companies that own Hulu. Facebook Watch, Facebook’s stab at TV dollars, is far from proven.
Broadcasters and traditional media companies like The New York Times and Meredith are getting better at monetizing their digital ad inventory, too, Utreras said.
The economy has shifted to direct-to-consumer marketers like Warby Parker and Casper. Right now, the majority of their ad budgets go to digital, but as they mature, they’ll diversify and put more dollars into nondigital media, said Pivotal Research analyst Brian Wieser, who joined an IAB webinar to discuss the 2017 digital ad report.
Those who want to see the digital ad pie spread more evenly shouldn’t pop the Champagne just yet. The big tech giants still have advantages over all the other digital ad sellers; they’re easy for advertisers to buy, and consumers spend a lot of time with them, Wieser said. There may be a dynamic to the biggest players over time, but today’s control more of the ad pie than the largest players did in the past, he said. “Google and Facebook just utterly dominate the industry,” he said.
“We may be seeing early signs of a turn in the tide, but there’s a significant way to go to address the imbalance in the advertising market,” said Jason Kint, CEO of digital publisher trade organization Digital Content Next and a reliable critic of the duopoly. “The slide in trust of Google and Facebook is driving brand advertiser and regulator scrutiny, which will likely only accelerate in coming months for good reason.”
As brands test Amazon’s direct link between digital ads and Whole Foods purchases, they spot new data nuggets — and gaps
Advertisers are using Amazon's recently-launched attribution feature to see how digital ads drive real-life purchases at Whole Foods.
‘I don’t think their outlook is dire’: Why a return to in-person events hasn’t deterred marketers on Clubhouse
Even with vaccine rollout and a return to in-person events, marketers still see the value in Clubhouse communities formed during the coronavirus pandemic.
Some agencies are giving summer Fridays a second look so employees can ‘enjoy their life again’
Agency executives say that the increased focus on taking advantage of summer Fridays this year is to help employees take the time they need to relax, improve mental health after a difficult year and avoid burnout.
SponsoredHow The Company Store is reimagining customer experiences for pandemic-era growth
Throughout the pandemic, some retail categories have been inherently successful. Home furnishings and décor are among them; with consumers spending so much more time at home, updates and renovations flourished. Criteo data from the first half of 2020 showed sales for items like outdoor furniture sets up 434% year over year, with other home items […]
‘Bridge the gap between paid and organic’: Why Reddit is building an in-house agency to work with brands
Reddit is building an in-house creative strategy agency, KarmaLab, in a broader bid in recent years to grow its ads business.
Cheat Sheet: Why Roblox is fast becoming one of the most important media businesses of the future
Gamers spent 9.7 billion hours on Roblox in the first three months of the year. Here's a look at how the company became one of the most important media businesses of the future.