The digital ad duopoly faces foes old and new

The Frightful Five—the five largest technology companies in the U.S.—were given the name for a reason. There is a legitimate fear among startups that they won’t be able to break through the oligopoly that has emerged in certain sectors.

Even getting exposure online through advertising is largely controlled by two firms: Google and Facebook. Now those companies are starting to lose their grip (ever so gradually). More importantly, startups might be missing out on important avenues for exposure that tend to get overlooked by new technology companies: TV and radio.

For the first time, Google and Facebook could see their combined share of digital ad spending fall. EMarketer estimates they will capture 56.8 percent of digital ad spending this year, down from 58.5 percent in 2017.

(Source: eMarketer)

Behind Google and Facebook are media company Oath and Microsoft. Even given Microsoft’s tech chops, it might not be growing fast enough to be a big threat to Facebook. Right now, the biggest threat to the digital ad duopoly could be a completely a completely different tech company: Amazon.

Amazon’s share of digital advertising could reach 4.5 percent by 2020, up from an expected 2.7 percent this year, according to eMarketer. This would push it to third place.

Two other up-and-comers are Snapchat and Twitter. Snapchat’s U.S. ad revenues could rise 81.7 percent this year, pushing it over $1 billion. That would give it more than a 1 percent share of the market.

Twitter is looking to maintain its share, which currently sits at 1.5 percent. Its ad revenue has been falling, a trend that may continue this year, but eMarketer expects it to return to growth in 2019. Twitter could see ad revenue of $1.12 billion this year, giving it about 1 percent of the market.

Things could be getting harder for Google and Facebook, too. Scrutiny is rising from both consumers and governments. Recent revelations about Cambridge Analytica’s misuse of user data from Facebook has eroded trust in a company that didn’t have much to barter away to begin with. The news immediately pushed Facebook’s stock down and it could have more negative repercussions for the company in the future, especially in Europe.

Increased competition in the digital advertising space is good news for startups, but it might not be the most effective or economical means of boosting a brand. Ebiquity surveyed advertisers and agencies about perceptions of different advertising media and their effectiveness in achieving their goals. Ebiquity concludes that there’s a big disconnect between these perceptions and actual effectiveness.

When it comes to perceptions about traditional media, it seems TV and the cinema are well-regarded as means of boosting return on investment, generating a positive emotional response and increasing brand salience, among other goals. When it comes to targeting people at the right place and the right time, which advertisers identified as their most important goal, radio was widely underrated.

(Source: Ebiquity)

Radio came out on top in this area because it happens to be quite effective in being able to reach listeners according to geography, demographics, context, time of day and day of the week. With the rise of radio listeners on mobile phones and smart speakers, it’s even turning into a good way of reaching listeners on connected devices.

Radio also performed well in most other areas in which advertisers sought to improve. This makes it by far the most undervalued advertising medium identified by Ebiquity.

While the power of TV in creating a better connection with viewers seems to be generally understood among advertisers, startups are less inclined towards traditional media advertising. It’s not hard to understand why. Startups might not have the budget for a TV advertising campaign. Radio is perceived as a dying medium even though smartphones and podcasts have helped give radio content new life. That combination gives radio a good ROI, but it still gets overlooked.

Startups instead are more interested in building up dedicated followings online. This can be very useful for early-stage startups that need small groups of people with a high level of interest in the product to help find bugs or generate buzz before a wide release. This can help with beta testing in software or small production runs in hardware.

Past this early stage, though, traditional media offers great bang for the buck in building a brand. It may be even easier to ignore as competition heats up in digital advertising. Snapchat is even offering free ads to some promising startups in the hopes that building a relationship early on will lead to more ad revenue in the future.

So don’t forget there are many avenues companies can take to build a brand. Even if you’re leading a young company focused on digital today, with any luck, the company won’t be young forever.

Free Email Updates

Free Email Updates

Get the latest content first.

Congratulations. Welcome to the family.

leave a Comment