ICYMI: Competition Takes A Bite Out Of America’s Leading Tech Services’ Share Of Growing Digital Advertising Pie
In its latest forecast, research company eMarketer has predicted that leading tech services’ shares of the digital advertising space will decline this year for the first time, while overall digital ad spending in the country will grow. Leading tech services have an even smaller share of the global advertising market (of which digital isn’t even half).
Contrary to “duopoly” claims by critics, smaller rivals have taken a bite out of leading tech services’ pieces of the advertising market by “growing more quickly than expected” and “seeking a larger share of the pie,” according to the Wall Street Journal.
We’ve noted in the past that leading tech services face competition from both established companies like News Corp, Verizon, and Microsoft as well as startups like Snap. Critics often overlook these facts and argue competition policy should arbitrate leading companies while ignoring these companies do, in fact, face competition and have rather fleeting holds on market segments.
Advertising Will Grow To Be A $535 Billion Industry, With Digital And Mobile Advertising As Just One Component. “In its latest report on global advertising market trends, released December 4, 2017, MAGNA forecasts media owners’ net advertising revenues to grow by +5.2% to $535 billion in 2018. This will be an acceleration from 2017 (+4.1%) mostly due to the impact of cyclical drivers in 2018 (FIFA Football World Cup, Winter Olympics, US Mid-Term elections). Neutralizing the five billion dollars of incremental ad spend generated by those cyclical events, the 2018 growth would be +4.1%, compared to +5.1% in 2017. Digital and mobile advertising sales will grow by +13% in 2018 to reach $237 billion or 44% of global advertising revenues. They will comprise 50% of total advertising sales by 2020.” (Global Advertising Forecast: Winter Update, Magna Global, 12/4/17)
eMarketer Research Predicts Leading Tech Services’ Share Of Digital Ads Will Fall As Smaller Rivals Grow Quickly, “Seeking A Larger Share Of The Pie.” “In its latest forecast, research company eMarketer predicts the combined U.S. digital ad market share of Alphabet Inc.’s Google and Facebook will fall for the first time this year, shrinking to 56.8% from 58.5% last year. At the same time, overall digital ad spending in the country is likely to grow nearly 19% to $107 billion in 2018. To be sure, Google and Facebook are still increasing their total ad revenue significantly, and no other competitor even cracks 5% market share. But those smaller rivals are growing more quickly than expected and are seeking a larger share of the pie.” (Alexandra Bruell, “Rivals Chip Away At Google’s And Facebook’s U.S. Digital Ad Dominance, Data Show,” The Wall Street Journal, 3/19/18)
eMarketer: “Smaller Players” Are Eating Into Leading Tech Services’ Share Of Digital Advertising. “eMarketer estimates [Google and Facebook] will capture a combined 56.8% of US digital ad investment in 2018, down from 58.5% last year. These figures have been adjusted downward, as smaller players such as Amazon and Snapchat are experiencing faster-than-expected growth. Importantly, Google and Facebook’s share of new digital ad dollars is declining as well. This year, they will garner nearly 48% of new expenditures. By comparison, that figure was nearly 73% in 2016.” (eMarketer Editors, “Data Suggests Surprising Shift: Duopoly Not All-Powerful,” eMarketer, 3/19/18)
Online And Offline Advertisements Substitute For One Another, And Companies Allocate Their Dollars In A Variety Of Ways, Notes Project DisCo. “Economic research confirms that online and offline advertisements substitute for one another. This is consistent with what one would expect to find. As we’ve discussed here on DisCo before, Internet radio does compete with traditional broadcast radio — aggressively so. It would therefore be strange to suggest that advertising on digital radio doesn’t similarly compete with advertising on broadcast radio. By using data from the Internet Advertising Bureau , , the Association of National Advertisers, and market research and intelligence provider MAGNA Global, the graphic below illustrates where digital advertising fits into the broader advertising space with the four other major advertising vehicles (radio, outdoor/billboards, print, and television), and represents how this categorization breaks down even further in the digital ad-supported ecosystem.” (Matt Schruers, “Infographic: How Ad Dollars Are Spent,” Project DisCo, 1/16/18)
(Matt Schruers, “Infographic: How Ad Dollars Are Spent,” Project Disco, 1/16/18)