Insights | July 5, 2018

The Digital Advertising Elephant Shuffle

Google and Facebook – on a combined basis – accounted for 58% of US digital ad spending in 2016, and by 2019 that figure is expected to be over 68%. That’s astonishing.

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No question, these digital advertising elephants have significant control in an industry that was ripe for the picking and/or displacement over a decade ago.

You can only imagine what industries will fall next once these companies decide to go on ‘full-court press’ mode in that industry?

Current state, Google and Facebook own the digital advertising market and have tremendous power as it relates to pricing, informatics, distribution, results, etc. And the difference between second and third place is massive. You begin to wonder if the US Federal government will need to break up these companies as they assert their dominance in other industries. How can a new entrant realistically up-end these incumbents when they appear to be capturing more and more market share every year, particularly if a new entrant does not have a killer product or unique alternative solution?

If this chart is to ever ‘balance out’ with other entrants taking some market share from Google and Facebook, a new way of thinking about digital advertising will need to emerge and gain momentum. Will it be a business model leveraging blockchain, or perhaps a business model utilizing machine learning and/or artificial intelligence? And what would that business model offer so far as product or solution to compete with the economies of scale achieved by Google and Facebook?

It seems as though monetization by subscriptions has worked well, but is there another customer acquisition (and potential monetization) approach that a new entrant could win with? Hard questions with even harder answers. As usual, the future will give us the answer….and many times it’s right under our noses if we only look hard enough.