Over the past year, Facebook and Google grew their constant currency ad revenue by about $18 billion, according to fresh estimates from Pivotal Research Group.
Excluding China -- where Facebook and Google capture relatively no revenue -- that’s about the same amount by which the global digital ad marketplace grew over the past year, per Magna Global.
How is that possible?
“Other media owners’ digital growth either came alongside Google’s as part of their ad network activities or displaced declines from other digital media owners,” Brian Wieser, a senior analyst at Pivotal, explains in a new note to investors.
More remarkable, Wieser and his colleagues don’t expect Facebook or Google to diminish in stature.
“We see no reason for this trend to change soon, as both Facebook and Google continue to innovate their ad product offerings and expand the ‘share of wallet’ they each capture from advertisers,” according to Wieser.
Rivaling Google’s forays into the marketing technology space, Facebook has additional upside from improved monetization at Instagram and the establishment of commercial models at WhatsApp and Messenger, Pivotal suggests.
The firm’s updated expectations for Facebook equate to a share of global digital advertising (minus China) that rises from 18% to 29% between 2016 and 2021. Pivotal’s updated growth expectations for Google equate to an ex-China digital share -- on a gross basis -- that rises from 54% in 2016 to 60% in 2021.
As such, Pivotal is raising its new price targets on Google parent Alphabet and Facebook to $1,090 and $175, respectively.
Meanwhile, the firm isn’t giving up on Twitter just yet, and maintaining its buy rating on the struggling social network.
Yahoo, however, is another story. Indeed, the tech dinosaur “would have been an afterthought at this point were it not for Verizon’s belief that it has a ‘reasonable basis’ to withdraw from its offer to acquire Yahoo,” Wieser remarked.