Rich Get Richer as Google and Facebook Dominate Web Ads
The article speaks about online advertising now being run mainly by two big ad sellers, Facebook and Google. Smaller ad sellers such as YELP are suffering strongly as Facebook rises in stock by 18% and Google is up by about 24%. According to a recent report, online advertising will account for 35% of all advertising budgets by 2017, an increase of 10% since 2013. Facebook and Google will make combined revenue of approximately $77 billion, which accounts for 19% of the global ad budget. From there, the next company is Yahoo!, which will make a mere $3.3 billion in advertising in comparison to the ad giants Facebook and Google.
In one of Mark Mahaney’s surveys, he found that 61% of people were looking to increase spending with Facebook, while 53% with Google. From his survey, Mahaney not only believes that the rich are getting richer but their online advertising business is on the rise. Mahaney believes Google has become so popular with online advertising due to their unique “real-time, commercial intent” such as vacation packages. Whereas, he believes that Facebook is the other giant because they continue to gather richer data about people through their likes and posts.
As other companies try to catch up to Facebook and Google, those two are in a competition to outshine each other. While Facebook attempts to implement new ad formats, Google is expected to dive into Facebook’s territory and use a couple of familiar ideas to better advertise.
This article relates to an idea we touched on slightly in class: “the rich get richer.” Here, Facebook and Google are the two giants that are more well-known ad sellers than the rest of the companies like Yahoo! The fact that people are more likely to have heard about them when it comes to advertising means that they likely have more knowledge about what they have to offer and are more likely to go with them when making a decision. While “the rich-get-richer,” other ad sellers like Yahoo!, Twitter and LinkedIn are suffering as a result of the immense control that the two giants have over the industry. In general, “the rich-get-richer” concept aligns with the “poor-gets-poorer” phrase and as it relates to web advertising, smaller factions are losing revenue as Facebook and Google are cashing in on the increase of business into online advertising.
Source: http://www.barrons.com/articles/rich-get-richer-as-google-and-facebook-dominate-web-ads-1443851396