Currently, we’re seeing advertising dollars and revenues become more concentrated with the biggest players. At the same time, certain advertising areas are expanding into new consumer territory. Let’s have a look.
Digital Ad Dollars Concentrating with Google and Facebook
According to the most recent digital ad spending forecast from eMarketer, the Facebook-Google domination of digital ad space is exceeding expectations in 2017. While eMarketer had predicted it to be just over 60 percent, the reality is that the two behemoths take in more than 63 percent of digital ad investments in the United States.
Senior eMarketer director of forecasting, Monica Peart, said:
“Advertisers are increasingly demanding more granularity in targeting capabilities to reach consumers. Google and Facebook have positioned themselves at the front of this demand curve by being the ad publishers with some of the best-in-class targeting abilities in the digital ad market. With Facebook being able to provide targeting based upon consumer interests and Google capitalizing on where those consumers have been through searches, both companies ensure their lead among digital ad publishers.”
Breaking it down further, eMarketer explores the numbers for Google, Facebook, Snapchat and Twitter.
In 2017, Google (including YouTube) will make $35 billion in U.S. digital advertising dollars, which is almost 19 percent more than last year and translates to a digital ad market share that’s just over 42 percent.
This is the first year during which mobile will make up more than half of Google’s annual ad revenue in the U.S. Advertisements on tablets and smartphones are up almost 29 percent to bring in just under $19 billion, which is 54 percent of Google’s total revenue.
Facebook and Instagram
For the first time, Facebook has (just) over 20 percent of the U.S. digital ad share. In the past year, its revenue increased more than 40 percent to nearly $17.5 billion. Facebook will also see more than $15 billion in mobile ad revenues, which is 88 percent of its overall ad revenue and almost 27 percent of the U.S. mobile ad market.
Instagram’s (owned by Facebook) mobile ad revenue is growing faster than 90 percent to reach more than $3 billion this year. In 2017, its share of the mobile ad market will near 5.5 percent in the U.S.
Snapchat and Twitter
Unlike Google and Facebook, Snapchat and Twitter are falling short of expectations and losing revenue.
Snapchat’s U.S. ad revenue is growing 115 percent, but is still almost $130 million short of eMarketer’s prediction at $642.5 million. With just over 1 percent of the U.S. mobile ad market and 0.8 percent of the overall U.S. digital ad market, Snapchat relies on that American market for 83 percent of its ad revenue.
Twitter’s overall ad revenue in the U.S. is dropping by almost 11 percent this year to hit just over $1.2 billion. Its share of the U.S. digital ad market fell from almost 2 percent to 1.5 percent. Twitter’s mobile ad revenue in the U.S. will also drop by more than 10 percent to about $1 billion, bringing its share in that market from over 2.5 percent down to less than 2 percent.
We see some of the story behind Instagram’s success and Snapchat’s failings in this recap of a Collective Bias study. Among the main points are:
- A drop in Snapchat downloads
- Competition for influencers
- Instagram’s strong features
- Snapchat’s inability to make real money for influencers
Digital Ad Market Expanding to Kids
The big names in digital advertising are certainly looking for ways to connect with the youngest consumers, from college kids down to toddlers. The 2017 Kids Digital Advertising Report from PwC explores how to move forward in this new era of the digital ad market.
Be aware that advertising to kids under 13 is increasingly regulated in the United States and Europe, with regulations touching on everything from food to spying.
The market is full of brands trying to reach kids where they are online – places like YouTube Kids, Disney, Minecraft, Musical.ly and more.
Digital advertising for kids is now driven by regulations for compliance for brands, agencies and publishers. These are expanding from the U.S. to Europe.
It’s also becoming less publisher-centric and more marketplace-centric, because kids’ time online is fragmented, and traditional sites are losing share.
PwC estimates that ad spend for the digital kids’ market will reach $1.2 billion by 2019, and make up 28 percent of all kid-targeted advertising.
Several social media platforms are striving to create kid-safe and compliant environments, and many of them include ads.
It can be tough for mainstream players to get into this space in compliant ways. Challenges include a lack of kid-tech expertise, kids making up a small portion of business and issues of trust.
Recently, we talked about some of the challenges YouTube faces when advertising to teens, and balancing that with teens’ general dislike of ads on the platform. Reaching the youngest consumers online is never easy.
The digital ad market is ever-changing: As it contracts in some places, it seeks to expand in others. Keep an eye on the advances of Google and Facebook, including how they might reach into the markets for younger consumers.