The Dominance of Google and Facebook in One Chart
For digital ads, everyone else is begging for scraps.
Over the next couple years, digital advertising is expected to pass television to become the largest ad market in existence.
One would think that this simple fact should translate to a bright future for many publishers, but the reality seems to be quite different. That’s because digital advertising is increasingly dominated by just two players, and everyone else is just begging for scraps.
The Ad Duopoly
Today, close to $0.60 of every dollar spent on digital advertising goes to Google and Facebook.
The crazy thing is that these are still early days, especially for Facebook, which grew its digital ad revenue by 59% last year. The social media company recently smashed Wall Street’s expectations again, as it revealed that Facebook’s mobile business alone was bigger than its entire business back in 2015 Q3.
This lopsided growth is quite the juxtaposition to the media stalwarts of the world.
Iconic brands such as The New York Times have struggled to make a full transition to digital, making only $200 million per year from the online ad side of their business. That makes the Times, along with other traditional media companies like News Corp, Time Inc, or Hearst, too “small” to even show up on our chart.
It’s a Platform Kind of World
In the digital advertising landscape, it’s all about the power of platforms. The majority of our chart is loaded with companies that have created (or bought) platforms full of user-generated content that people use every day. Facebook, YouTube (owned by Google), Twitter, Snapchat, LinkedIn, and Yelp all make the cut on our chart, because they have gained massive scale.
In a nutshell, this is why the best technology companies have overtaken names like Exxon Mobil or Walmart to be the largest by market capitalization in the world.