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Digital Ads — Google and Facebook still at the head of the pack

April 12, 2017.

As we know, the advertising world is changing drastically, with a massive shift of ad spending toward digital platforms. There are two main players who stand out in the global crowd. It will come as no surprise: those two are Facebook and Google.

A Huge Market

The American company eMarketer predicts that our neighbours to the South will spend no less than 83 billion US dollars on digital advertising this year. This amounts to annual investment growth of almost 16%.

Facebook’s market share of that direct growth will lead to a 32.1% jump in revenue. As for Google, eMarketer expects its ad earnings to increase by 14.8%. Those are staggering figures when you know that Google already gets almost 41% of digital ad spend in the United States, and that Facebook is in second place with 20% of the market.

Google’s Virtual K-O

Google’s fortune basically comes from revenue generated by its search engine marketing ads (SEM), which represent an estimated 28.5 billion US dollars in 2017. This corresponds to 77.8% or ALL OF THE SPENDING in that ad category in the United States.

Expected revenue for 2018 is up around 32.4 billion US dollars; just to give some context for comparison purposes, the earning forecast for the entire industry is 40.5 billion – still just in the United States. That gives an idea of Google’s almost complete dominance.

Meanwhile over at Facebook… and elsewhere

With the arrival of mobile technology and its impact on the ad world, you would think new players might take centre stage -- like Apple, perhaps. Nothing could be further from the truth. Google and Facebook will share almost 2/3 (57%) of mobile ad spend in 2017, with 32.4% going to Google and 24.6% going to Facebook.

To give a little perspective: Twitter is expected to get 2% of the pie, while Amazon should get 0.6% and LinkedIn should get 0.4%.

At Facebook, growth will mainly be driven by display ads, an area where the company already reigns supreme: almost 40% of digital display ad placement will go to Facebook in 2017. According to eMarketer, this growth is expected to continue, and to reach 43% of the market in 2019, padded by Instagram revenue. As you may recall, Instagram, which belongs to Facebook, started showing ads in 2015. Instagram’s share is nothing to be sneezed at: the mobile photo app will provide 1$ out of every 5$ of Facebook ad revenue.

What about outside of the United States?

We get the same picture around the world, with Google and Facebook splitting 57% of digital ad revenue. Even with the arrival of “new” major players like Snapchat, which has about 130 million daily active users, it is hard to see how Google and Facebook will lose ground in the coming years.

In fact, Snapchat’s ad revenue, while growing, should only reach a “modest” one billion US dollars in 2017 (and 2 billion in 2019). In other words, Google and Facebook’s shocking dominance should last for a while yet.

While analysts agree that digital ad spend outstripped television ad spend for the first time in 2016, this runaway concentration of ad revenue in the hands of just two players is somewhat bewildering. When you factor in the fact that those same players are two companies that probably know more about you and your habits than your own mother does, then it can really give you the heebie-jeebies!