Duopoloy

Duopoloy

noun

noun: duopoly; plural noun: duopolies

a situation in which two suppliers dominate the market for a commodity or service.

In the world of digital media and ad tech, the duopoly refers to the two advertising behemoths Google and Facebook. Because they are “walled gardens” who have a vast library of user data, Google and Facebook have a strong competitive advantage over other companies who don’t have access to such a large compilation of users at their disposal. Other companies are making strides to take back parts of the ever increasing pie, but it is a slow process.

According to a report from eMarketer, the total market share of Facebook and Google will drop from 57.9% to 55.6% during the period of 2016-2020. Most of this dropoff can be attributed towards Google as Facebook has actually increased its market share since 2016.

According to eMarketer, here are the current and predicted ad revenues of notable players in the ad tech industry. Note that from 2016 to 2019 total ad revenue is predicted to jump from $71.6B to $105.44B, a 47.3% increase.

Why are Google and Facebook so Dominant?

Easy to use. Using Facebook and Google advertising platforms bears very little barriers to entry, and there is no required minimum spend. Whereas most advertising platforms cater to large corporations, Facebook and Google provide solutions for all of the small businesses out there.
High CPMs. Facebook CPMs can run as much as 8x as much traditional cpms on other advertising platforms using the same type of ad. Because of Facebook’s unique ad tech capabilities, many buyers are more than willing to pay.
Walled Gardens. Facebook and Google both have significant amounts restricted data that cannot be accessed through any other advertising solution provider.
- These walled gardens can force users to use their entire ad stack if they want to utilize their data and services.
- They provide limited report information so as to stop data leakage. Additionally, it is hard to challenge performance when these companies are “grading their own homework”.
- Everytime that advertisers place tracking devices, such as the Facebook Pixel and the Google Analytics Tag on their websites, they are providing even more information and data to the duopoly. This creates a snowball effect that makes them even bigger.

What are other Companies doing about the Duopoly?

Facebook and Google are predicted to drop a few percentage points in total market share over the next few years. That isn’t to say that their digital ad revenues are decreasing – in fact they are actually increasing. However, the digital advertising pie is becoming significantly larger year after year, and other well known companies are growing their ad revenues faster YOY than the duopoly as a percentage. The result is that other companies are slowly increasing their market share and equalizing the playing field.

Amazon

Amazon is slated to grow faster than other other company in the industry. One JPMorgan report estimated that Amazon’s ad business would grow from $2.8B in 2017 to $6.6B in 2019. That’s a staggering 236% increase!

Snapchat

Snapchat has been increasing market share at a fast pace. Currently, around 90% of ads sold on the Snapchat platform are done in an automated manner.

Microsoft

Microsoft is on track to make over $4B in advertising revenue this year. This growth in ad revenue can be attributed to its acquisition of professional networking site LinkedIn as well as the search engine Bing.

Vox Media

Vox Media has created a digital advertising marketplace called Concert, where many publishers can join forces to fight back against the duopoly.

Sources

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— Kevin O’Leary

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Published by William Chen