As many others have pointed out, the rise of the smartphone (and to a lesser extent, the tablet) has turned a handful of tech giants into digital gatekeepers to a degree that they never were when the PC reigned supreme. The shift in online activity from web browsers to mobile apps distributed through a pair of giant app stores, and the massive share of smartphone usage claimed by a handful of apps, has given Apple (AAPL) , Alphabet/Google (GOOGL) and Facebook (FB) an incredible amount of influence over the digital content that consumers in much of the world end up seeing every day.
Over the last couple of years, another shoe has begun to drop: Two of those "gatekeepers," Google and Facebook, have been leveraging the incredible popularity of their mobile apps/services, along with their data, to rapidly take share from smaller online ad players. The trend doesn't show any signs of letting up.
Research firm eMarketer just estimated the U.S. digital (online/mobile) ad market, which accounts for close to half of Google and Facebook's ad sales, will grow 15.9% this year to $83 billion. That's down a bit from the 20% growth eMarketer previously estimated for 2016, but still far above the 3% to 4% 2017 growth forecast by ad agencies for total U.S. ad spend, as ad dollars keep shifting from print, radio and to a lesser degree TV to digital channels.
Google, previously forecast to control 30.9% of the global digital ad market in 2016, is expected to claim 40.7% of the U.S. market in 2017. That's largely due to a 78% share of a $36 billion-plus search ad market; Google's U.S. search ad revenue is expected to grow 16.1% to $28.6 billion, outpacing the roughly 10% growth forecast for the market overall as share is taken from Yahoo! (YHOO) and Microsoft's (MSFT) Bing.
Facebook is expected to have slightly less than 20% of the U.S. digital ad market, taking share as its display ad sales (i.e. news feed, video and banner ads) grow 32.1% to $16.3 billion. The social media giant is expected to claim 39.1% of the display ad market, after being previously forecast to claim 34.5% of the market in 2016. Google's display ad sales are expected to rise about 7% to $5.2 billion, leading its share to drop to 12.5%.
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