Something strange happened last year. Facebook overtook Google as the leader in Display advertising and it looks like they’re on the way to take more than 50% market share.
A few observations:
Facebook is doing things differently. And as the leader in the market, they’re doing things very differently. These actions can be termed as both good and bad. They’re slowing down on FBX (de-certified a bunch of partners) and apparently moving to a more API driven ecosystem of third party tool makers. This is a part of a broader move where they are moving from an open ecosystem of ad platforms, to a closed platform with just tools or buyers operating using their API. This means for the most part, Facebook decides which user to buy for every ad in the near future.
Facebook has eaten Microsoft’s lunch; and tools. Facebook’s growth has edged out Microsoft; It has also acquired the tools namely — Atlas from Microsoft.
Google has retained a static market share (even as revenue grows). This is probably the reason why Google is busy trying to find the next multi-billion dollar opportunity through robots, self driving cars and more.
Verizon just gobbled up AOL but I don’t expect Verizon to be around in this market for too long.
The market share of all other players is shrinking while the net digital revenues is actually increasing.
Mobile Advertising is set to overtake Desktop display advertising.
The centre of gravity in advertising has shifted from Mountain View to Menlo Park.
I think this is a decade of Facebook and I would not be surprised if they take control of as much as 50% of the display market in the next few years. If the rest of the industry wants to survive Facebook, they would need to work really closely together to build better tools, better standards and in general better results.
Malware, bot traffic, transparency and viewability are some of the maladies affecting the display advertising industry (outside of Facebook) and despite facing these from the last 5 years, there are no obvious solutions that help advertisers across the spectrum. One might argue that there are companies, data and tools available.
But it is complicated. Let me explain. The ad industry is convoluted where democratization of advertising software and data has yet to happen. Advertisers wanting to access wide ranging cookie pool data, viewability tools, fraud tools etc must be willing to spend hundreds of thousands of dollars each month. This is outside of Facebook. If you want to do the same on Facebook, you could do that even for a few thousand dollars (maybe even a few hundred dollars a month).
Facebook also has user profile data plus none of the problems (like Fraudulent traffic, bots etc) which eliminates the need to use third party tools and data. This very fact is driving advertisers to Facebook and the Display industry outside of Facebook stands to loose.
It is about time that the Ad tech industry fixed its issues.
Democratization of tools would be a great starting point. Whether it is fraud, viewability or data. Advertisers should be able to use it as a service. Pay as you go models are here to stay. Minimum guarantees and minimum spends need to go.
Some tools need to go the way of open source or towards self regulation. I don’t see Viewability and Fraud being a single company problem. I see it as an industry problem. I don’t see why the industry can’t self regulate like the way the email companies have did. Spamhaus (https://www.spamhaus.org/) could be an interesting approach to replicate in the advertising ecosystem.
Data sharing between organizations could also help. Data is money and data is private, but I do not see how we can effectively compete with islands of data against a giant like Facebook. I don’t have a clear idea of how it would work, but two competing companies of identifying users across device have better chance of working together than competing with Facebook who can simply identify users across devices using its login.
