The digital-media industry has recently become a giant duopoly in which Alphabet Inc (NASDAQ:GOOGL) Google and Facebook Inc (NASDAQ:FB) are the key leaders. Ad industry veteran Jay Sears, Pivotal’s Wieser says that a majority of advertisers have to play by the rules of the two companies. Records indicate that their revenues were sharply up in 2016 with the third quarter of the year being the biggest ever. A total of $17.6 billion was spent on digital ads, which was a 20% increase from the same period a year earlier.
However, this is very unfortunate for the startups because they may not get a grip on the market. In a research note to investors, Wiser wrote, “Smaller companies will continue to operate in the shadows of the industry’s two dominant players.”
The duopoly control has had an increasing impact on the advertising-tech market
Venture Capital can easily conform to Google’s and Facebook’s market dominance. The company has been experiencing a downward trend of its activities since early 2015. Adtech, an umbrella term for companies that automate digital advertising has been having prominence in the last five years but it is now on a declining trend. These and others cannot monetize according to Balderton Capital venture partner Suranga Chandratillake who concurs that advertising is about selling attention. But sadly, a big chunk of the attention has been shifted to Google and Facebook and scaling up to compete with them is altogether another tall order.
The ad tech industry shrank 3% in the first half of 2016, which was at the expense of the two Californian giants. 85 cents of every new dollar spent on digital in the US last year went to the two companies. They have continued to build walled gardens that will help them tap their treasure troves
Spending on digital ads in the U.S. will likely grow this year
There has been an era of real dramatic investment in the digital world. The ad: tech market is quickly embracing the search, social, and mobile platforms as investors and entrepreneurs concede to the Google’s and Facebook’s win. Meanwhile, Alphabets’ stock closed at $807.77 a decline of $0.24 or 0.03% while that of Facebook traded at $118.69 witnessing an increase of $1.83 or 1.57%.