The newly released Internet advertising industry’s annual report appears to show a continued duopoly-like dominance by Google and Facebook as the gatekeepers of the growth in new advertising spend.
The report highlights the extent to which Google and Facebook are taking most of the new money at the expense of the rest of the smaller players in the digital ad business. The real growth of the so-called duopoly situation goes back to 2015 where US venture capital fund Kleiner Perkins Caufield & Byers noted that the two tech giants accounted for 75 per cent of all new online ad spending.
A new estimate of Google and Facebook’s dominance in handling the lion’s share of gross digital ad spending puts it at 77% plus.
In-Line With Predictions
This appears to be broadly in line with eMarketer predictions from earlier in the year that showed Google as looking likely to take business from Yahoo and Microsoft Bing, and expand its share to $28.6bn (nearly 78 per cent) of the US market.
Consumers’ increasing use of mobile search on their smartphones is believed to be one of the main drivers of growth in ad spend handling for Google. The share of the total digital ad market spend that can be attributed to just Google is now thought to be nearly 41%.
Despite being grouped in the ‘duopoly’ with Google, Facebook has actually taken share from Google, along with Yahoo and Twitter. eMarketer figures put Facebook’s share of the total digital ad market this year at over 20 per cent. This has been helped to a significant extent by photo-sharing app Instagram.
Facebook’s focus on more use of video on its own platform and Instagram are believed to be key drivers of this growth.
Those with a (perhaps surprisingly) small share of the mobile ad spending market are Snapchat and Twitter.
What Does This Mean For Your Business?
As a business looking to spend your advertising budget widely, the trend for customers to increasingly be using mobile search on Google for example, and being engaged by all things video (e.g. on Facebook) can be important indicators of where and how to spend advertising money. When there are a small number of large players offering advertising however, it may make it a little simpler to shop around, but it could also mean less choice of services and prices.