Are we at peak duopoly? That’s the key question posed by Wall Street analyst in a second quarter earnings preview of the major digital media platforms he follows.
Pivotal Research Group Analyst Wieser doesn’t answer the question, per se, but he says “advertisers certainly want” a new player, what he calls a “third force,” to create more competition on what is increasingly becoming a marketplace of two suppliers: Google and Facebook.
He speculates on Verizon’s just-launched AOL/Yahoo combo Oath and even Amazon as potential players that could ease up an increasingly constrained supply chain of digital audience impressions.
While Oath’s impact remains to be seen, Wieser says it’s almost a cliche that Amazon is the “sleeping giant” waiting to wake up and stir the ad market.
Wieser notes there are several underlying problems facing the duopolists, especially the so-called “walled garden” issues of “viewability” and objective, third-party measurement.
“These issues appear to be relatively more pronounced for Facebook based on events from the past year,” he notes, adding, “Although Facebook is making progress in providing better access to third parties to provide independent measurement, viewability problems won’t go away, especially as advertisers raise standards on this metric. Facebook is not without upside potential of course: we think that Instagram continues to provide a source of growth, and both Messenger and WhatsApp offer longer-term optionality.”
He also noted that “brand safety” concerns continue to plague Google and that the “issue will not go away anytime soon.”