Digital advertising

Fuelled by the increasing maturity of programmatic advertising and the popularity of social, video and mobile media, this market is set to show strong growth.

The digital advertising market is to reach 268 billion EUR by 2021, IDATE DigiWorld forecasts. Google (search) and Facebook (display) alone control over half of the worldwide market, with players such as Baidu of China and Microsoft – through Bing – battling to be the ‘best of the rest’.

The key growth drivers of social, video and mobile advertising

The online advertising market is driven by three types of consumption, namely social, video and mobile (which can all overlap). Social, as with display, is dominated by Facebook. Video display is more competitive, but is in fact mainly a battle between Google and Facebook; the former through YouTube, and the latter through video posts within its network. Mobile is a similar story, but the success of Facebook in moving their business into mobile is worthy of note. Facebook has succeeded in transitioning their advertising revenues from fixed to mobile, with 88% of ad revenue now coming from mobile.

Programmatic advertising is the key technological driver

As the advertising market becomes increasingly digital, more of its revenues will be generated through the technologies of programmatic advertising, i.e. the automation of the decision-making process of buying advertising space. Combined with retargeting (showing users adverts of sites they have already visited), this can be used within display advertising, also incorporating social, mobile and video advertising, and is also expanding into traditional TV advertising marketplaces.

Amazon and Verizon looking to challenge the duopoly

Looking ahead, one should keep an eye on the ‘sleeping giant’ Amazon. Amazon owns a huge database of user purchase records, something the other giants do not own – and no doubt would very much like to have. Coupled with the fact that users are increasingly going directly to Amazon for product-related searches (and not Google), the value of Amazon’s database is only increasing. The success of Amazon Alexa/Echo (gaining more personal data) and the acquisition of Whole Foods (expanding into retail) adds further weight to Amazons advertising potential. Also noteworthy is Verizon who acquired Yahoo! and AOL in 2017 and 2015 respectively and merged them into the current media subsidiary Oath.

Still very high growth rates
A market solidly dominated by Google and Facebook
How digital advertising segments are positioned, according to market size and growth, up to 2021
Note: This figure contains some overlaps, such as mobile display advertising being included in both mobile and display segments
Source: IDATE DigiWorld in ''Advertising and TDaaS''