Google and Facebook duopoly force change in online advertising industry

Facebook and Google provide high ROI and easy-to-manage online advertising options for thousands of businesses but have put the pressure on advertising agencies of all sizes to innovate. The duopoly is now predicted to attract 60 percent of all online advertising spending in 2017, according to eMarketer.

87 percent of the $26 billion in revenue this quarter from Alphabet, Google’s parent company, came from online advertising. Facebook reached similar numbers netting $9.3 billion this quarter with 98 percent of that coming from online advertising, according to Wired. Other large tech corporations haven’t achieved such success as Twitter reportedly lost two million high-value users for advertisers and Snap’s stock went on a downward slope since going public.

Digital Ad Revenue
Google and Facebook have positioned themselves at the front of this demand curve by being the ad publishers with some of the best-in-class targeting abilities in the digital ad market. With Facebook being able to provide targeting based upon consumer interests and Google capitalizing on where those consumers have been through searches, both companies ensure their lead among digital ad publishers.” –Monica Peart, eMarketer senior director of forecasting

Advertisers and ad agencies are looking for new ways to combat the duopoly, mostly by questioning current advertising practices and techniques. Many marketers are pushing for fee reduction on agency services, which would give some agencies a competitive edge. Facebook ads currently cost nearly 25 percent more than they did a year ago. But Facebook and Google both benefit from their large user base, allowing for highly-detailed analytics reports and competitive targeted ad targeting technology.

The growth of the online ad agency has brought fraudulent online advertising practices to light. Also known as “spoofing”, fraudulent online advertising practices use third-party ad exchange websites to sell advertising space directly to high-value sites. However, the ad would actually lead to a low-value, low-traffic site. In addition, Facebook recently banned certain online advertisers who used “cloaking methods” which send users to unauthorized websites that passed through Facebook’s screening process.

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