Google and Facebook together took over half (56.4%) of money invested in the Internet advertising market during 2018, a share which WARC expects to rise up to 61.4% this year. This growth is squeezing other online media owners, as the pool of ad money available to them is now declining for the first time (down 0.7% to $111Bn).
Both digital giants’ share in total ad spend is expected to grow up from the 24.5% reached in 2018 (around $144.6Bn) to the 28.6% in 2019 ($176.4Bn).
Last year Google and Facebook succeeded to grasp almost one in four dollars invested in advertising around the world, while both companies revenues from the mentioned source meant a market share 20.3% in 2017 and in 2018 more than doubled the 10.8% scored in 2014.
Looking deeper inside Google-Facebook’s Lion’s share in the digital ad market
James McDonald, Data Editor, WARC, and author of the research, comments: “One of the main reasons for the ‘duopoly’s’ success is their creation, and subsequent ownership, of the digital formats perceived to be most effective by adland’s decision makers: paid search and social. Several surveys in the past year have shown search and social to be highly regarded by advertisers in terms of meeting campaign objectives.
“Google dominates the search engine market, handling almost all mobile searches worldwide and nine in ten on desktops. Meanwhile, ad buyers can target Facebook’s 1.48Bn daily users by leveraging a rich cache of personal data.
“Beyond major brands, the accessibility of the duopoly’s ad buying tools has attracted a long tail of small- and micro-advertisers, creating a competitive advantage which has been core to revenue growth.”
Three digital marketing trends rooted in Google and Facebook’s dominance
Against this backdrop, Warc identifies other three trends related to the so called ‘duopoly’ in the field of digital advertising: Google and Facebook are directly competing for video dominance; Google is battling Amazon for dominance in the search market; and younger americans changing Facebook for Instagram.
a) Aiming to dominate in the video marketing market
Both Google and Facebook hope to unlock brand budgets while also controlling the trade of targeted performance advertising.
Regulation emerges as the main threat to the ‘duopoly’s’ growth, which currently shows no sign of a significant slowdown.
The value of the online video market across 12 key markets covered by WARC research (Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Russia, UK, and USA) is $30.2Bn, which equates to 21.5% of linear TV, and is growing rapidly. Much of this money is spent on social media sites, including Facebook and YouTube (e.g. 86%, or £1.9bn in the UK).
b) Google facing Amazon to keep holding the top position in search market
Ads accounted for over 85% of Google’s total revenue in 2018 with the majority coming from paid search, a market expected to be worth $130.6Bn worldwide this year.
Google handles 63,000 search queries per second – or two trillion in an average year – but its dominance of the paid search market may soon come under threat from Amazon. The e-commerce giant is developing its own search business, looking to pair advertisers with consumers close to the point of purchase.
True that WARC expects Amazon to make $13.9Bn from advertising this year compared to Google’s $107.4Bn, but Amazon’s ad business is growing much faster than Google’s, with 69% of marketers in a recent WARC survey stating that they intend to up their ad investment on Amazon this year.
Amazon, which has a rich database of consumer purchasing habits, is also scoring far higher than Google in the emerging area of voice search. While Amazon Echo devices are used by 63% of American smart speaker owners, Google’s Home devices still serve just the 26% of the smart speaker’s owners in the USA.
Chrome’s share of the browser market is much lower on mobile devices than in desktop, but Google still dominates the mobile search as well. While Chrome is not the default browser on Samsung, Apple and Huawei devices (47.9% market share combined), the Google-designed Android OS is utilised by three in four smartphones.
Google has also moved to gain a foothold in the smartphone market, at least within its homeland. Currently chasing the pack, reports show however that US sales of Google’s Pixel phone were up 43% year-on-year in Q4 2018, outpacing both Apple and Samsung.
c) Younger Americans saying bye to Facebook and hi to Instagram:
Instagram is now the main driver of daily user growth for Facebook.
Some estimates point that as many as 15m US users have left Facebook’s core platform since 2017.
Marketers have noticed Instagram’s rise in popularity and increased their marketing investment in this social network. That’s why Instagram has recorded a net budget increase (the number of practitioners intending to increase budgets minus the number intending to decrease) of 67%. WARC surveys recently published shows that the net budget rise experienced by Instagram (the mentioned 67%) goes ahead of that scored by Amazon (63%), YouTube (60%), and Facebook, just a 13%.
Recent moves, such as the launch of an encrypted messaging service or providing a secure environment for online payments worldwide last year in the wake of the Cambridge Analityca scandal are part of Facebook’s tentatives to refrain the steep fall and regain consumer trust.
Facebook spent itself $1.1Bn on advertising worldwide last year to amortiguate the negative consequences derived by the Cambridge Analytica scandal.
Image over the headline.- © WARC.
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