The number-one social network and the search engine second to none, Facebook and Google are the leading ad ecosystems, each dominating in its niche. However, what was, up until recently, called their duopoly is now steadily being broken up by Amazon. Less obvious for non-US citizens, the global retail colossus is steadily elbowing its way into the American ad space. All this accompanied by other shifts and new actors entering online advertising, creating new opportunities to innovate with each coming day. In order to make the best of these new openings, you should be aware of the trends that will shape the future of online advertising. Given below is our roundup of how the industry had evolved over the years together with our forecast of what you can expect based on the latest data.
The Early Days of the Search
Google was founded in 2000. Fast-forward two years, the young search engine introduces Premium Sponsorships and AdWords in their initial form. The AdWords have first been displayed as promoted links on the search page to the right side from organic results. Eventually, these links have migrated to the top of organic results subsuming the Premium Sponsorships.
Today, Google has grown into a wide array of search and ad products. Aside from sponsored links, you can now reach out to specific audiences via Google Display Network and even advertise brick-and-mortar entities via Google Maps.
The Social Internet
The beginnings of Facebook advertising are humble indeed. Ever since its inception in 2004, Facebook had made minor deals for their ad space with individual advertisers. It is only in 2006 that Facebook had officially extended from highschool and university students to wide audiences starting from 13 years of age.
In 2007 the platform had launched Facebook Ads, allowing auction-based advertising. Leveraging an extensive user data, the platform was iterating its UX/UI all these years to deliver upon the popular demand with precision.
Facebook had introduced a multitude of unique social features and types of shared multimedia content. The advertisers have embraced these new channels for outreach, tailoring their marketing efforts accordingly.
The Giant of e-Commerce
Amazon was founded in 1994, however, it’s not until 2012 that it had started allowing vendors to run banner ads at Amazon.com itself. So why is it making so much headway in terms of advertising space? Because like Google and Facebook it completely dominates in its niche which is retail.
When it comes to online shopping, the US has a long history with Amazon. The company is such a powerhouse that it offers unimaginable features like 2-hour shipping in some areas through its Amazon Prime subscription service and more.
With so much value, Amazon.com is not only a great place to buy and sell but also to run ad campaigns. Unlike Facebook and Google, people go to Amazon with unquestionable commercial intent to view and buy goods. This means a better sales funnel that starts from the final segments of the customer journey.
Knowing this, Amazon is ramping up its ad services to be on par with Google’s AdWords, having already introduced a solid advertiser console. By the end of the 3rd Quarter, the income from Amazon ad services had totaled in 2.459 billion US Dollars, expected to reach 38 billion yearly by 2023.
The Next Decade in Advertising
Today, the market is taken up by giants with Facebook and Google owning the space, and the fact that Amazon is making its way in, only confirms the reign of select few. Currently, the ad market share of Facebook and Google is 58% with 4.2% owned by Amazon that is steadily chewing up more.
In the aftermath, there isn’t much going for smaller and minor ad tech companies. They are left with only a fraction of the market share.
According to a study by Luma Partners, ever since 2013, their number had dropped by 20% combined with over 50% drop on venture investment in 2015.
In Europe, the situation is even grimmer with 80% of the digital advertising medium swallowed up by Facebook and Google. The 20% is represented by the rest and this is not just limited to startups and small independent companies. Even renowned brands like AppNexus are faced with harsh decisions to assure their good future. The champion of independent ad tech had been acquired by AT&T on its quest to cover over-the-top TV and media in August 2018.
For the Remaining Many
The prospects for the so-called “20%” are grim for now but exceptions are plenty. The content is still the ruling King and there are parts of the media world where the giants don’t reach. These parts are tough to spot and the small ad tech can still thrive on them.
One great example is audio programmatic ad buying and AdsWizz. The company had offered some truly advanced functionality such as dynamic ad insertion, advanced programmatic platform and ad campaign monitoring features.
Among many things, it pioneered some truly unique targeting metrics available on mobile devices like people who are jogging or weather-based options. AdsWizz was acquired by Pandora music discovery platform in March 2018.
2. In-Transit Media
Another great example is in-transit media, the option to reach the users on their personal devices while they are on a lengthy plane, coach or cruise liner trip. Currently, the most vividly proven by InAdvia, you can thrive by offering programmatic advertising models in this medium. It allows multiple 3rd-party publishers to get onboard and reap some unique outreach potential.
3. OTT and Independent Publishers
Going back to the acquisition of AppNexus by AT&T, media is still too complicated to be fully consumed by the big two or three globalists. This is exactly why companies like AT&T have a shot at the world-level competition.
While Google’s YouTube is tightening its revenue policies, it’s alienating a large number of independent content creators. At the same time, it manages to disappoint advertisers with poor content curation. This leaves much opportunity to be seized by the rest of the streaming and ad tech. They have the chance to nurture positive relationships with the given advertisers and YouTubers.
In the meantime, Roku beats everyone by selling 2 millions more OTT devices than Google with its Chromecast, along with Amazon and Apple TV lagging behind in 2017. Still leading the race in 2018 and expanding its value package with new services.
Not only do OTT/CTV and independent streaming services pack the most potential for the 20% ad tech, but they are also the most enabling for the underdogs and indies.
Content is King, as we’ve said, and audiences will follow and support their content creators wherever they go. Be it Patreon or other types of distribution models — that we will see in the coming years.
So there you have it, our overview of ad tech in 2019 with a bit of forecasting on the key opportunities that lie in the upcoming decade.
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Where Does the Digital Go: The Past and the Future of Online Advertising
April 23, 2020