“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Hannu Verkasalo, founder and CEO at Verto Analytics.
As tech behemoths dominate search, enterprise services, social networking and mobile, Facebook and Google run a duopoly with no signs of stopping.
While there are other tech giants in the ring – Amazon, Apple and Microsoft, to name a few –one significant factor distinguishes Google and Facebook from the rest of the pack: They own the lion’s share of total online and mobile advertising dollars. And, given the size and scope of both companies, Facebook and Google dominate the monetization of time that consumers spend online.
Facebook and Google have evolved to control volume, ad tech tools, cross-device reach, user experience and analytics and targeting.
Volume: Due to their size, Google and Facebook can quickly execute campaigns that reach a high ratio of the total audience in a given market. This creates a significant impact on a given target audience and delivers impressive numbers for marketers and their business goals.
Ad tech tools: Their sizeable R&D departments and mature platforms have enabled Facebook and Google to create the standard for best-in-class advertising products and tools, such as Facebook Ads Manager and Google AdWords.
Cross-device reach: Because so many consumers access Facebook’s and Google’s services across a number of devices, both have been able to develop superior cross-device ad delivery abilities.
Analytics and targeting: Based on the trove of user data these platforms collect, the duopoly has developed extremely in-depth data analysis and self-learning algorithms that support more effective and targeted ad campaigns and provide marketers leverage with detailed feedback on channels, metrics and ROI.
User experience: Due to the investment into the apps and web services they have and time spent across their services, Facebook and Google can seamlessly embed ads that follow the consumer journey.
Despite this duopoly, tech giants and startups alike still have opportunities to establish or redefine advertising-based revenue models. In the online and mobile advertising realms, there are emerging areas that give other players a chance to win more market share or gain incremental dollars arising from new business models or advertising products.
For example, they could carve out a niche with underage and next-generation mobile users. If the new generation of internet services can develop services and apps with higher retention rates for younger audiences – House Party is one example – this demographic may represent a significant change in consumer behavior, especially when joining the workforce and mainstream economy.
Another area ripe with opportunity is new user interfaces. Consumers continuing to adopt new personal assistant apps, such as Alexa or Siri, or devices, like Amazon Echo, may shake up the existing dominant services for search, messaging and social networking that control user flows and journey.
Content continues to prove it is king as it serves as the main driver for engagement. Players such as Netflix, Amazon and major TV networks and carriers are all investing and reinventing the principles of content creation and distribution. As more major deals and mergers transpire, such as AT&T acquiring Time Warner, we could witness a new leader in cross-platform advertising.
Think about where we were 10 years ago in the advertising industry and where we could be headed in the next decade. With voice-powered services, mobile and connectivity all continuing to hold consumer interest, advertising is set to undergo major disruptions in market conditions, consumer behavior and technology, and it may barely resemble today’s structure. But as companies adapt to influential trends, fellow giants and new players won’t stop trying to challenge the status quo.
Follow Hannu Verkasalo (@hverkasalo), Verto Analytics (@VertoAnalytics) and AdExchanger (@adexchanger) on Twitter.
