Although Google is the $4 billion darling of the US display ad space, players like AOL, Amazon and Facebook are closing in on that share.
Most noticeably, Facebook, which for the first time last quarter served more ad impressions on mobile devices than on the desktop, experienced a 50.5% increase in US digital display ad revenue last year to Google’s 33.3% growth rate, according to eMarketer.
If eMarketer’s estimations are accurate, Facebook has already pulled ahead of Google in US display ad spend. Although Facebook was nipping at Google’s heels in 2012, totaling $2.18 billion in display ad revenues to Google’s $2.26 billion, the social platform pulled ahead of the search giant last year totaling $3.28 billion in display ad revenue to Google’s $3 billion.
EMarketer includes mobile along with desktop in net digital display ad estimations, which makes the growth explainable.
Fast forward to the end of this year and Facebook is expected to reach some $4.8 billion in digital display revenues to Google’s $4 billion. This is a markedly higher estimation than one year ago, when eMarketer forecasted Facebook would generate $3.35 billion in digital display ad revenues by the end of 2014.
“Facebook and Google are still much larger than everyone else, and while Google is still much larger than Facebook in terms of total market share, Facebook’s growth is particularly impressive,” said Dan Marcec, a spokesman for eMarketer.
Facebook’s growth figures are not surprising, particularly because of its mobile traction. AdExchanger reported last summer that Facebook was encroaching on Google’s mobile ad share. In August, according to an eMarketer source, “Facebook has charged ahead of most of its competitors in the mobile display space. … The reach that they offer advertisers combined with their targeting makes them a relatively singular option for advertisers looking to reach people with display ads on mobile.”
However, it’s worth noting that in recent quarters, Google has promised less of a focus on ads and more of an emphasis on its hardware business. Wall Street analysts have also identified Google’s display business as robust, but have expressed concerns over margins.
Although Facebook and Google dominated in digital display ad revenue, Amazon and AOL are also worth watching. Amazon will generate $172 million in display ad revenue this year (not including search), according to eMarketer. The ecommerce giant has in recent months been experimenting with new ad formats, including incorporating video into ecommerce ad placements.
“We haven’t seen results yet, so it’s kind of hard to say, exactly, but the new ad formats are certainly something we’re keeping an eye on and watching closely,” Marcec said. “In terms of where Amazon is right now and will be in the next two to three years, it’s similar in size in the US as AOL in overall digital ad spending,” including search.
Specific to display, AOL’s growth had dropped off pretty significantly for a long time, Marcec said, but because of the company’s seeming commitment to “programmatic, video and [renewed] ad pricing, they’ve been seeing some success now, which is pushing their growth back in the double digits.”
While eMarketer pinned AOL’s display ad revenue growth rate at 9.6% last year, the research firm expects this rate to increase to 15.5% this year. Yahoo, on the other hand, underperformed with a -6.4% growth rate in digital display ad revenue last year. EMarketer had considered such factors as lower inventory levels and short-term revenue losses as a result of internal restructures. This is reflected in Yahoo’s net display ad revenues for the United States, which dropped from $1.35 billon in 2012 to $1.26 billion last year.
Yahoo is on course for a modest improvement this year, and will experience 2.2% estimated growth in digital display ad revenue. Slight growth would put the company at an estimated $1.29 billion this year. However, the volatility due to organizational changes and continued acquisitions is still apparent – eMarketer estimates that the 2.2% growth rate in digital display ad spend this year could dip again to 2% in 2015.
Although Marcec noted Yahoo is making an effort to gather new ad revenue streams around video and Tumblr, “we haven’t seen enough results yet to predict any significant changes long-term.”
