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Tech giants create digital ad duopoly


Tech giants create digital ad duopoly

According to a recent forecast presented by research group eMarketer, the digital advertising industry will see its duopoly tighten as Facebook and Google continue to assert their dominance.

eMarketer’s forecast shows that the two online giants will share 60% of the market as Google’s revenues increase by 15% and Facebook’s rises by 32%. The report also shows that digital ad spending in the US will grow by 16% to $83bn (£67.9bn).

As a result of the two firms’ stronghold on online spending, a digital duopoly has been created, and this is upending the advertising business. Experts believe that back in 2015, the two digital enterprises accounted for as much as 75% of all new online adverts spending. It is also estimated that if the figures submitted by the two companies were excluded, the digital advertising industry actually shrank during the first half of last year.

The rapid emergence of the two companies as digital gatekeepers comes at a time where online spending is on course to overhaul television as the industry’s biggest source of revenue this year.

Both Facebook and Google built their businesses upon display advertising and search advertising respectively, and both have created mobile offerings that have attracted consumers, who are now spending more and more time on their mobile devices.

Google is on track to retain its lead in the search advertising industry and, according to eMarketer, is forecasted to expand its share to $28.6bn (£23.4bn), which will equate to almost 78% of the US market, taking business away from the likes of Bing and Yahoo.

Equally powerful is Facebook in the display advertising industry, and eMarketer predicts that Facebook’s revenue will rise to $16.3bn (£13.3bn), which equates to 39% of the market, taking share away from Twitter, Yahoo and Google. Furthermore, Facebook will also increase its mobile share, mainly thanks to photo-sharing platform Instagram, which is forecasted to contribute up to 20% of Facebook’s mobile ad revenue this year, compared to 15% last year.

This impressive growth from Facebook in the display ad market will help it to narrow the gap behind its larger rival Google. In terms of the total digital advertising market, the social network’s share will grow to around 20%, whereas search giant Google’s will slightly dip to 40.7%.

According to the forecasts, the next best company is believed to be Snapchat, which is set to see an “explosive growth” of 158% to $770m (£630m) this year. Despite this, its market share in the mobile ad industry is still small at 1.3%, in comparison to Google’s 32.4% and Facebook’s 24.6%.

The forecasts for microblogging site Twitter do not read well, with the company’s US ad revenues dropping almost 5% to $1.3bn (£1.06bn), with its total digital advertising marketing share expected to decrease to 1.6%.

Alan Littler

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