After two decades of dithering, big advertisers are finally moving to the Internet en masse. RBC Capital projects that online ads as a percent of ad spending will rise from 25 percent in 2013 to 35 percent in 2017.
And yet, if you are at an ad-dependent businesses like Yelp, AOL or Yahoo, you might find yourself wondering why it’s so hard to keep growing when the online-ad market you’re working in is growing so much more quickly. The two biggest reasons are: Facebook and Google. And increasingly Facebook.
The two ad giants are not only cleaning up in the Internet advertising market, they are doing so at the expense of smaller companies. Between Google’s search ads and ads on YouTube, Alphabet will see about $ 68 billion in ad revenue this year. Facebook will see $ 17 billion. However, Facebook is growing faster: at an estimated clip of 42 percent this year against Google/YouTube’s 32 percent.
Even between these two giants, things aren’t entirely equal. Facebook and Google are not only emerging as the kings of online ads, they are rival kings, not just competing with each other for growth but often doing so at each other’s expense. No longer can this market be said to be a zero-sum game…