Google, Facebook Dominate Digital Ad Revenue

This year, Google will generate $57.80 billion in total digital ad revenue worldwide, an increase of 9 percent over last year, representing 30.9 percent of the total worldwide digital ad market, according to a report from eMarketer.

The company will remain the dominant player in worldwide search ad spending, capturing $47.57 billion in search ad revenue in 2016, or 55.2 percent of the search ad market worldwide, the report noted.

In 2016, Google will generate $34.11 billion in mobile internet ad revenue worldwide, leading the worldwide mobile ad market with a 33.3 percent share. Facebook is a distant second, with a 17.7 percent share, according to the report.

“Mobile technology is changing the game when it comes to ad revenue in very profound ways. Consumers’ consumption of all types of media is increasingly happening in mobile,” eMarketer senior forecasting analyst Martín Utreras told eWEEK. “At the same time, the technology is allowing marketers to target consumers in ways that were never possible before. Also, the technology is rapidly creating new behaviors in consumers that provide new opportunities for marketers to engage them—a good example of this is the Pokemon phenomenon.”

Utreras also noted eMarketer expects some currency revenue headwinds in the short-term because of Brexit, as the U.K. represents roughly 9 percent of revenue, and Western Europe is also a significant part of Google’s revenue.

“In general, the [United States] and U.K. are very similar, with many of the big players being the same. However we do see some differences as well: In the [United States], television is still the dominant medium for advertising,” Utreras said. “In the U.K., e-commerce has moved more rapidly to capture a larger share of retail. These differences create some interesting challenges and opportunities in order to reach consumers and allocate ad dollars.”

In the United States, YouTube is the leading over-the-top (OTT) video service, with 176.1 million users this year—a whopping 94.3 percent of OTT video service users in the United States.

YouTube net ad revenue will grow 21.1 percent this year to reach $5.18 billion worldwide, according to eMarketer.

“Although we do expect a lot of consolidation in the market, especially in the ad-tech side, we still expect for the market to grow and become more competitive,” Utreras said. “Consumer engagement with mobile activities continues to increase; at the same time, there is an ever-increasing number of options for consumers to do through their phone in terms of media, entertainment and utilitarian activities like shopping, maps, email, messaging, work, et cetera.”

However, Utreras doesn’t expect a slowdown in innovation that could bring competitive challenges even to large companies such as Google or Facebook, noting Snapchat’s growing popularity among both consumers and marketers as an example.