• by James G. Brooks, Jr. , Columnist, April 3, 2017

Anyone working in digital media knows the argument for fragmentation: Decades ago, there were just three TV networks. If you wanted to advertise on TV back then, you didn’t have much of a choice.

Now, of course, marketers are spoiled for choice. There are hundreds of cable networks plus online video, streaming networks like Hulu and Netflix. And that’s just on the video side. You can also buy banner ads, search and native advertising, among other ad units.

Weirdly, though, the same people who know this argument by heart have demonstrated by their actions that they long for less fragmentation. In particular, they have created the Google-Facebook duopoly and ensured that we return to a simulation of the days of three networks, only now there are just two. 

Lately, though, cracks have appeared in the Facebook-Google duopoly. This is a great development for our industry and one that will ensure that it remains competitive and innovative. On a practical level, media buyers now have some authority to push back against clients who insist on putting so much of their spend behind those two companies.

Cracks in the façade

The tide began turning against the duopoly late last year when the fake news epidemic illustrated for many the lack of brand safety on Facebook and Google. Brands found out that their ads were showing up next to hate speech or agenda-driven fake news and were understandably miffed. 

Fueling that anger, Facebook was caught drastically inflating its time-spent metrics for video by as much as 60-80%. More recently, Google was caught doing something similar with AMP, its mobile-based publishing platform. 

Though both have subsequently agreed to third-party analyses of their operations, for many marketers, that was cold comfort since (in Facebook’s case, at least), the abuses had been happening over a long period of time. 

In late January, the industry found a spokesman for their discontent with Marc Pritchard, Procter & Gamble’s global CMO, who chastised the industry for its lack of transparency. More recently, Havas pulled its buys on Google and YouTube for UK-based clients in the name of brand safety. 

Momentum continued into late March as AT&T and Johnson & Johnson yanked their Google and YouTube buys for the same reason. 

3 Arguments for diversification

Google claims it will address this situation. Facebook is also working hard to expunge fake news from its News Feed and to provide some transparency to advertisers.

While those two are taking steps to do what they should have done in the first place, marketers should take a pause to reconsider spending so much on those two platforms. Here are three reasons:

1. A duopoly kills innovation and will raise prices. You don’t need to sit through Economics 101 to know that when two companies control 75% of the adtech market as Google and Facebook currently do, that there will be less competition and as a result, less innovation and higher prices for all. The only way to counter this trend is to spend money with companies who aren’t part of this duopoly. 

2. The alternatives can be better. While those outside the duopoly can’t match Facebook and Google’s reach, they can offer more customization, better targeting and more control over one’s data.  

3. Leverage. Let’s face it, marketers have more leverage over smaller players than they do over Google and Facebook. While those two hem and haw over offering transparency, marketers can insist on it with smaller players and expect to get it. Independent ad tech firms know they have to offer more to compete. 

It would be foolish to expect a major change in Google and Facebook’s fortunes this year. The two are likely to remain dominant in digital advertising for years to come. However, if you look back at the short history of digital media, it’s clear that monopolistic positions don’t last. In the 1990s, for instance, AOL controlled 60% of Internet media. In 1999, it looked like AltaVista was going to corner the market on search. 

That’s why a bit more nibbling at the edges would be a healthy sign for an industry that’s giving way too much power to two companies. Now that there’s a bit of momentum, those on the margins should make their best attempts to win marketers back.