Google and Facebook will take more than 70% of all money spent on display advertising online in the UK by 2020, according to a report suggesting the firms will soon __have an effective duopoly spanning the Atlantic.
The two companies already account for about three-quarters of the £18.4bn display ad market in the US, and 53% of the £4bn currently spent in the UK.
That growing dominance has put pressure on publishers such as newspapers, most of which __have found it difficult to make money from large online audiences as print sales and advertising have fallen rapidly. Google also dominates search advertising, which has largely replaced the classified ads which previously generated significant revenue for newspapers.
According to the report by OC&C Strategy Consultants, Facebook and Google will grow a combined 24% each year to 2020, taking a 71% share of the total ad market worth £4.1bn, more than the total value of display advertising in the UK today.
OC&C partner Fergus Jarvis said publishers had been worried about the impact of Facebook and Google for some time, but the scale of the threat was “quite concerning”. He said: “The scale and speed is really a call to action for media companies. By the time [Facebook and Google] get to 70% of the online ad market, that doesn’t leave a lot of space left elsewhere.”
The ability of Facebook and Google to hoover up money spent on ads is primarily due to people spending more time on smartphones. In the US the two firms have taken 85% of all new digital ad spending, the bulk of which is on mobile devices. “A lot of usage is going in that direction,” said Jarvis. “We are now at a pivot point where the average UK adult is spending more time looking at mobile content than TV. We assume that that trend will continue.”
Though the forecast suggests the two firms will dominate the future of display advertising based on current trends, there has been some pushback from advertisers concerned about their power. In particular, Facebook’s recent string of admissions that it had been providing inaccurate measurements for many of its ads, in some cases over estimating how much they were viewed by as much as 80%, has led to calls for greater transparency.
At the time, Sir Martin Sorrell, head of the world’s largest advertising group, WPP, said it was a “clear example that referee and player can’t be the same person and that marking your own homework doesn’t work”.
However, Jarvis later said Facebook was tackling the problem effectively. He said: “There’s quite a lot of sniping around that particular Facebook story. It’s not simple how you measure impact. Facebook are responding to some of the concerns. It’s a foolish man who bets against Facebook being able to handle those complaints.”
