A report from MoffettNathanson Research titled The Digital Duopoly should give people who are blowing time between NewFronts sessions this week something eye-popping to read.
Analyzing the IAB’s new 2015 Internet Advertising Report, it concludes that Google and Facebook drove two-thirds of the industry’s growth last year. Twitter contributed 4%.
Here’s a stunning conclusion: The other “legacy” digital names --AOL, Yahoo and IAC-- added not a bit to the growth rate, says this analysis of the IAB report.
Google contributed 43% of U.S. digital ad revenues between 2000-2015, Facebook make up less 20% or so and again, the legacy names “essentially made no contribution.”
“Big picture, the two largest players--Google and Facebook -- now have a 54% aggregate share of the U.S. digital market,” the report says, up from 43% in 2010.
In short, as the title of this report makes clear, the digital business, already shaking down to a few players, is substantially captured by just the two biggest ones.
The report says from 2010 to 2015, the digital advertising market was driven by search and video. During that period, digital ad revenue grew at a 25% CAGR.
Google and Facebook now have a 67% share of all mobile advertising revenue. Between 2010-2015, Google’s mobile revenue grew at an astounding 94% CAGR. While Facebook, Twitter and the assorted “others” grew faster in 2015, that was off a smaller base to start with.
Social advertising represents 70% of the growth in display advertising, and Facebook has a 65% share of social. And keeping on the domination track, MoffettNathanson notes that from 2012-2015, Facebook ad revenue grew 54% CAGR.
Obviously, Google and Facebook each represent not just 800 pound gorillas in the digital space, but as this report makes clear, they represent a whole jungle’s worth of them.
In the realm of all advertising, the Internet is the big gorilla there--it drove 115% of all advertising total revenue since 2012. TV contributed 25%, and outdoor advertising 2%. All other kinds of advertising were in the negative zone. In 2015, the Internet did even a bit better, driving 169% of the growth in the total ad market. Zounds.
The big guys, though--Facebook and Google--are so far ahead of the game. “Given Facebook and Google’s domination in key verticals like mobile, social and search, it’s hard to imagine the digital ad engine slowing anytime soon,” MoffettNathanson write.
The report explains that because the digital sector divides itself into those many pieces--and because Google has quirks about reporting data about some facets of its businesses--it’s been hard to grasp just how big the biggest are, and how much they control. “Truth be told,” the report says, “we have been spoiled by covering the U.S. media industry where four broadcasters and six cable network programmers comprise about the entire national ad business.”
And truth be told by these stats, it looks as if, increasingly, we’re looking at two companies dominating it in the future.