Are Facebook and Google nearing a duopoly in the digital advertising market?

Anne Freier

In Mobile Advertising

November 7, 2016

Mobile advertising is thriving. Indeed, most of digital advertising is expanding rapidly to eat into a pie once dominated by magazines, radio and TV. But change isn’t a bad thing. Whilst publishers and advertisers are working away to get their digital ads viewed by as many of the two billion smartphone owners worldwide as possible, there’s just one problem.
The market is fast turning into a duopoly between major players Facebook and Google. Indeed, the two internet giants currently grab 90% of the revenue within the digital ad industry. Meanwhile, everyone else seems to be shrinking.
These are the findings by digital publisher trade group Digital Content Next’s Jason Kint, who recently crunched the numbers from Interactive Advertising Bureau (IAB), Google and Facebook. His research highlights how the two companies accounted for pretty much all of the US digital ad growth this year.
Kint’s calculations show that ultimately this means, publishers and marketers are competing for $300m of the $2.7bn in Q1 ad revenue growth. And he’s released a figure to prove it:
Google and Facebook dominate digital ad market share
Broken down, Google accounted for 60% of ad revenue growth, whilst Facebook came in at 43% growth. Ultimately, that means something has to give.
Kint acknowledges that there are some other ways to generate cash in the ad game, but collectively it doesn’t look too good for the ‘everyone else’ businesses.
Digital advertising does have an image problem. That’s trustworthiness. Ad fraud isn’t particularly helping the matter, grabbing $7bn in misplaced revenue a year. However given the success of Google and Facebook, it’s a little surprising to see a recent Wells Fargo report find that consumers do not trust the companies with their data.
Indeed, Facebook already has an image problem as it progressively lowers privacy and security measures to collect user data sets for its advertisers to tap into.
Kint concludes:
jason kint

“All of this information is vital to understanding the dynamics around data ownership and ad blocking — two complex issues which will impact our ability to evolve and improve the web we want as an industry. Facebook, due to its closed platform, and Google, due its dominance in browsers, ad tech, search and advertising, will have a large seat at nearly any industry or regulatory table discussing critical issues. So we urge the industry to keep your eyes wide open. Lax rules around data collection and use and incomplete solutions to ad blocking may very well play into their hands as they angle to swallow up that last 10%.”