Duopoly being threatened by e-tailers
The online advertising market is showing no signs of slowing. Led by Google and Facebook, it is expected to reach 500 billion EUR by 2023. Alibaba and Amazon, which occupy the number three and four spots, respectively, trail well behind but may well shake up the status quo, thanks to their more detailed user data, including centres of interest and online shopping history.
A 500 billion EUR market by 2023
According to IDATE DigiWorld, the online advertising market is expected to grow from 330 billion EUR in 2019 to more than 500 billion EUR by 2023, which means average annual growth of 10.6% during that period. The two main formats, search and display ads (programmatic and non-programmatic), are forecast to represent 43% and 51% of total online advertising revenue, respectively, in 2023. There are three forms of online advertising that overlap more and more: social, video and mobile. A user can, for instance, watch a video on a social media site on their mobile. In 2023, these three segments are expected to generate 132 billion EUR for social advertising, 64 billion EUR for video and 375 billion EUR for mobile. The United States still dominates the market, but China is not far behind and catching up quickly.
Asia-Pacific driving digital advertising market growth
Global digital advertising revenue by region
Still ruled by the Google/Facebook duopoly
Google and Facebook have long been the sector’s two heavyweights, far outstripping all competitors. Google dominates search advertising and social and video display ads. Google is a serious rival in this last segment, notably thanks to video ads on YouTube. Facebook has enjoyed massive success on mobile, which generates more than 90% of its advertising revenue. Among the top challengers, Amazon made headlines in 2018 by rising to the number three spot in the US, although still well behind the leading duo. Worldwide, IDATE DigiWorld estimates China’s Alibaba to be in third place, with a 9% share of the global market, followed by Amazon (4%), while Google (31%) and Facebook (20%) remain solidly on top.
Can eCommerce giants challenge Google and Facebook's dominance?
Main players' share of online advertising revenue, 2018
Amazon and e-commerce, online advertising’s third power
Despite the unshakable dominance of Google and Facebook, it is worth looking at how Amazon, and advertising incorporated into e-commerce in general, will affect the market. Unlike Google and Facebook, advertising is not a priority for Amazon since its main source of income is the sale of physical goods and cloud services. That said, the e-commerce giant is already ahead of Google on product search. This had endowed it with a goldmine of detailed shopping information on its customers that nobody else has, which puts it in a singular position of strength, even if the two market leaders also cull these same data: Google with Shopping Ads, and Facebook via Instagram and Stories.
Amazon is the most popular starting point for shoppers, ahead of search engines
Solutions used for online product searches in the US
Native advertising, strong potential for market specialists
Native advertising is an increasingly popular form of online advertising. It derives its name from the fact that it appears to be a “native” or integral part of the medium on which it appears. Adverts that appear on social media posts, aka in-feeds ads, are a prime example of native advertising, along with recommendations found in articles on news sites. These native adverts are often viewed as less intrusive than “like” pop-ups, which annoy a lot of users and can even prove counterproductive. In countries where it already exists, such as the United States, IDATE DigiWorld estimates that native advertising today accounts for more than half of the display advertising market.