Facebook and Google accumulate nearly half of all online advertising revenue, making them the two biggest digital advertising platforms in the United States. Just last year, the U.S. online ad market expanded by nearly $12 billion and these two firms accounted for over 77% of that spending. However, the battle is on to challenge this “duopoly.” For the first time, a new eMarketer projection states that Facebook and Google’s share of the U.S digital market will decline in 2018. The key contributors to this competition are Amazon and Snap. Advertisers are hoping that the emergence of a third-party contender could ultimately provide more leverage to help keep prices in check.

Amazon

Many ad executives believe that Amazon poses the biggest threat to the duopoly. It’s extremely successful expansion into areas such as streaming video and artificial intelligence confirms this belief. Amazon is also seeing very strong digital ad growth. CFO Brian Olsavsky has credited advertising to be a “multibillion-dollar program” for Amazon. A JPMorgan estimate states that the ad business brought in $2.8 billion in 2017, and that number is expected to grow to $6.6 billion in 2019. Although this number is still minute in comparison to the billions of dollars Facebook and Google are currently raking in, the growth proves potential is evident. Right now, Amazon ranks fifth among the digital advertising platform providers in the U.S. but is on track to reach third by 2020. In many ways, Amazon is already king in the sense that it can match purchase behavior with brands’ ads. This will be huge in helping Amazon chip away at the dominance Facebook and Google currently holds. Amazon is also unique from any other potential competitors because it has the financial backing to take on the big guns in the advertising business. Its website generates the traffic needed to build a lucrative advertising business. So far Amazon has been conservative in its ad load. This creates the question of when Amazon will begin to take advantage of its significant influence on shopper data to integrate the placement of ads in other areas. This will be the ultimate test of Amazon’s ability to eventually take over the duopoly. Next year, Amazon plans to expand its infrastructure in hopes they can get more brands buying ad space on their website. Currently, they are working on looking for more places to implement video ads, which demands the highest ad rates in digital. Amazon is in a favorable position because they excel in media and retail. They know purchase data and they know what their customers need. There is no doubt Amazon is a company to look out for in the advertising industry.

Snap

Snapchat is one of the most popular social networks in the world with nearly 200 million daily users. However, Snap Inc. only represents a minuscule sliver of the U.S ad market, but its rapid growth offers insight that it will begin to have an impact on the competition. Snapchat is one of the only platforms where you can reach the ambiguous 13-17 age group, which is extremely enticing to advertisers. The demographic also leans heavily toward 18-24 and 25-34 audiences. Daily users of Snapchat visit the app 18 times per day and spend 30 minutes on the app daily. Snapchat’s self-serve creativity makes it different from all other advertising platforms. Content is often natural and unedited, giving it a “behind the scenes viewpoint”. According to eMarketer, Snapchat’s US ad revenues will jump 82% this year. This means that it will secure a 1% share of US digital ad spending and its projected to hit 3% by 2019. Again, this doesn’t even compare to that of Facebook and Google, but it is enough to put it on the map.

Although companies like Amazon and Snap are moving in the right direction when it comes to taking down the duopoly, Facebook and Google are not going to be hurting by any means for a very long time. Facebook and Google are so advanced in the realm of digital advertising that catching up to them is not going to be an easy task. Their progressive targeting abilities are currently unrivaled. With Facebook being able to target consumer interests and Google capitalizing on where consumers have been searching, there is no doubt they take the lead in digital advertising. With continued progress, Amazon and Snap will slowly climb their way up the hierarchy.

Sources:

https://www.campaignlive.co.uk/article/why-tech-duopoly-spells-even-bad-news-traditional-media/1488051

https://www.wsj.com/articles/the-race-is-on-to-challenge-google-facebook-duopoly-in-digital-advertising-1497864602

https://www.fool.com/investing/2018/03/20/is-the-google-facebook-duopoly-cracking.aspx

https://www.fastcompany.com/40541592/heres-how-amazon-could-shake-up-the-google-facebook-ad-duopoly

https://www.fxempire.com/news/article/amazon-ready-end-alphabet-facebook-advertising-duopoly-490343

https://neilpatel.com/blog/explore-snapchat-ads/