Report: Facebook and Google Are Losing Ad Dominance

A new report from eMarketer suggests that the Big 2 will experience dips in market share over the next few years.
According to a new eMarketer forecast, the Big 2, that is the top two companies in terms of digital advertising revenue, Google and Facebook, are expected to lose market share by 2021.

The duopoly enjoyed a combined share of U.S. digital ad spending of 58.5 percent in 2017, but this is anticipated to fall to 56.8 percent over the course of this year, translating into a nearly two percent loss. By 2020, this will drop an additional point and a half to 55.3 percent.

That said, eMarketer analysts anticipate a rebound beginning sometime in 2020. And beyond that, while their dominance will slightly decrease, both platforms are expecting to see significant revenue increases over the next several years.

Image via MediaPost

The declines are not a function of an overall decrease in digital ad spend; conversely, overall spending will hit $107 billion in 2018, reflecting a 19 percent increase Instead, The Wall Street Journal points to rivals like Amazon and Snapchat as the main reason, suggesting that advertisers are increasingly testing platforms outside of the Big 2 in their efforts.

What has not been factored into this estimate is marketers’ growing wariness toward the Big 2 with regards to brand safety and an increasingly alarming public perception that these properties have amassed too much power with little regulation from outside forces. These concerns have already made a financial impact on tech stocks as of late.

Following widespread public outcry in the wake of the Cambridge Analytica scandal, Facebook shares fell 8 percent in a single day. The news has sparked a far-reaching conversation about Facebook’s ability to monetize user data—and do so in a seemingly unfettered fashion.

Users have also taken to Twitter to announce their plans to #deletefacebook. One significant member of the movement has been WhatsApp co-founder Brian Acton. WhatsApp was acquired by Facebook in 2014 for $16 billion.

Google, and more specifically its video behemoth YouTube, are also on shaky terms with leading advertisers. With leading brands threatening to reduce spend on the platform, YouTube has had to revise and bolster its approach to brand safety.

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After Facebook’s News Feed Changes, What’s Next For Publishers?

Facebook’s announcement a few weeks ago that it plans to put more content from friends and family into users’ news feeds will have forced many digital publishers to reassess their social strategies. From social-first publishers in the vein of Unilad to mainstream news outfits like the New York Times, the majority of publishers have seen Facebook as a key part of their distribution and marketing strategies.

Video strategies in particular might need a rethink, with many publishers pushing into video due to it’s Facebook-friendly nature, and some even devoting teams entirely to social video, as Al Jazeera did with AJ+.

With the dust now settled after Facebook’s announcement, what come next for digital publishers?

Engagement is King

Though some publishers may see the move as an attack by Facebook, the company itself says the update is an improvement based on user feedback. As such it believes the changes will make its platform more engaging for users, which has potential benefits for publishers; a more engaged user will pay more attention to the content they see.

The changes are also part of a broader reaction by Facebook to allegations that Russian actors used the social network to try to influence the 2016 US election. The Russia story has tarnished the platform’s image as a news distributor, so any actions which restore Facebook’s reputation could make it a more effective tool for publishers too.

The company does however acknowledge that “Pages may see their reach, video watch time and referral traffic decrease.” Interestingly too, Facebook’s director of product management Mark Hull admitted the company expects time spent on Facebook to go down, meaning not only will publishers’ content be further down the News Feed, but it’ll be less likely that users scroll down that far too.

Facebook’s advice to publishers is to focus even more on engagement, which it measures through views, reactions, comments and shares. It seems comments in particular will significantly boost ranking, as the company says posts which “generate conversations” will show higher on the News Feed.

Adam Mosseri, head of News Feed, says that video is actually the best way to do this, saying that videos, and live videos in particular, tend to prompt discussions. Facebook’s line, then, seems to be that Pages can still reach big audiences, but it will be more important than ever that content plays to the all-important algorithm.

Double Down on Facebook?

Some do think there’s merit to Facebook’s angle, saying that the update will improve the user experience, getting a better balance between publisher and user generated content.

Matt Breen, commercial director at social publisher Media Chain, agrees that a less cluttered news feed will provide opportunities for companies like his own. “Facebook’s latest announcement means that there will be less clutter in the News Feed, with publisher content reducing from 5% to 4% of total posts,” said Breen. “This represents a greater opportunity for Media Chain’s social media brands to stand out, capture attention and drive user engagement.”

Jungle Creations, the social focussed publisher behind popular Facebook pages VT and Twisted, says it will use the opportunity to double down on the platform. The company believes that a reduction in publisher content on the News Feed will mean those like itself who specialise in social content will stand out even more.

“The News Feed update is an opportunity for us to really own the branded content space because we’re best placed to navigate the updates,” said Jungle Creations’ commercial partnerships director Mitch Strong. “There will still be room for quality publisher content in the News Feed, it’s just now it will be a less crowded place so we’ll have a greater opportunity to cut through the noise.”

Strong believes the rules for Facebook essentially remain the same, and follows Facebook’s line that those who create content which drives engagement will find success. Breen echoes this sentiment, saying that “our focus is to engage users on platform, with quality content that evokes emotion from users, which ultimately stimulates conversation on platform that Facebook will prioritise in the News Feed.”

However both acknowledged the importance of diversification for any digital publisher across social media platforms, and said social publishers like their own should diversify beyond social media, with Strong citing Jungle Creations’ release of cookbooks and opening of a restaurant as examples.

Strive for Self-Sufficiency

Others see opportunity in the changes for a distinctly different reason: they believe it will force publishers to finally call time on an unhealthy relationship and focus on fostering direct relationships with their own publications.

“It’s critical for media outlets to create innovative, monetizable solutions on their own terms—rather than staking their futures on social algorithms over which they have no control,” said Jessica Rovello, co-founder and CEO of Arkadium, which creates interactive content for digital publishers.

“Going forward, we’re going to see more publishers using subscription models, and investing in innovative, interactive experiences to secure user loyalty on their own platforms.”

James Pringle, co-founder and CEO of video discovery platform Suggestv, agrees while acknowledging that some publishers’ video content is more suitable for social distribution, meaning that social media will continue to play an important role in their distribution strategies.

“Different publishers will have different requirements on this balance – for example, news brands will have a different mix compared to creators of emotionally driven engagement and community content. But, what all publishers have in common is a need to engage users for longer, within their own brand context, on their owned and operated websites,” he said.

Pringle doesn’t think that video should be any less of a priority for publishers in light of the changes, as he sees the push into video as a consumer driven trend, but he does think it’s time for publishers to refocus their video strategies on their own domains.

“We are seeing a lot of publishers going back to basics on their strategy and taking a far more rational view of what needs to be done to grow high-yield inventory, maximize the ROI of their content investment and move them from low-video environments to potentially being able to have video on every page,” he said.

Survival of the Fittest

Some believe other platforms will emerge which will provide distribution opportunities in the same way Facebook did, which could become a new focus point for video strategies.

“Nature abhors a vacuum,” says Todd Krizelman, co-founder and CEO of MediaRadar, an ad sales management tool. “As Facebook pulls away from publishers, others are stepping forward to help drive audience. So, while publishers will need to backfill the audience urgently, they are unlikely to be left in a lurch for long.”

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Ad-spend on YouTube, Facebook to grow 130% in 5 years

Data from Juniper Research has found that advertising spend on FVoD (Free Video on Demand) content, such as media on YouTube and Facebook, will surge over the next 5 years, reaching $37 billion (€29.9bn) by 2022. This is up from an estimated $16 billion in 2017.

In addition, unique users of such content will reach just under 4.5 billion globally by 2022, as the appetite for free video media continues its expanse.

OTT’s Push Live Content

The research report, Digital TV & Video: Network and OTT Strategies 2017-2022, found that leading FVoD provider YouTube, which sees over 1 billion hours watched per day, will face increasing competition from social media platforms. It observed that the delivery of live video content via social media channels will be one of the growth areas for 2018, as users increase the volume of live broadcast content posted to these platforms. Such examples include Instagram, which has over 800 million monthly active users, and Snapchat which has 178 million daily active users.

Research author Lauren Foye explained: “This content will increasingly be of interest to advertisers, especially in view of Facebook’s monthly active user base of over 2 billion people. The company has launched an app and website ‘Facebook for Creators’ to help users refine video content and generate viewership.”

Juniper found that this will aid growth in content consumption, with data usage from OTT content surpassing 840 Exabytes by 2022, the equivalent of 129 billion hours of 4K streaming.

Pressure from Advertisers

Recent changes to YouTube’s Partner Program means that it will only accept channels with more than 1,000 subscribers, and 4,000 viewing hours acquired across a year, to its shared advertising revenue programme. This change in strategy results from increased advertiser pressure following several high-profile, offensive, video posts by users. Nevertheless, Juniper forecasts YouTube to account for almost a quarter of all FVoD ad spend by 2022.

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Report: Facebook And Google Dominate As Video Ads Grow

A new study commissioned by cloud computing giant Salesforce shows that Google and Facebook continue to dominate the world of digital advertising, and are adapting as more and more marketers and advertisers turn to video.

According to Salesforce’s Digital Advertising 2020 Report, which the company officially unveiled Thursday morning, 65% of companies increased their video advertising budgets over the past year. And 52% of advertisers are choosing to produce their video ads in-house.

While video ad spend increases, Google and Facebook continue to dominate the overall digital ad spend landscape, with Salesforce estimating that over the next year, those two companies (and their subsidiaries Instagram and YouTube) will account for 66% of all digital advertising spend worldwide.

These same companies are also capturing the value of video. While Salesforce estimates that display ads, which it says account for 15% of the market, will decline over the next year to 14% of the market, YouTube, which currently accounts for 15% of the market, will rise to 16% of the market. In other words, as display ads decline in favor of video, Google is positioned to pick up those pieces.

The Salesforce report also found digital advertising and marketing are continuing to converge, with a majority of companies now using the same teams and budgets for both purposes. Brands are also overwhelmingly turning to data management platforms (DMPs) to manage the scale of their data, while figuring out the most effective way to share that data with partners.

And, while companies are still using traditional digital metrics like impressions, most are also beginning to use advanced metrics that allow for more sophisticated and long-term tracking.

Salesforce also predicted that artificial intelligence will become more prominent in advertising, driven in part by voice assistants like Amazon’s Alexa and Google Home. Almost three quarters of advertisers surveyed already advertise through voice assistants, or are planning to some time over the next year.

Is Facebook’s Latest Algo Change A Paid-Media Apocalypse?

When Facebook said it would change its news feed algorithm to prioritize users’ families’ and friends’ posts, advertisers worried it would also affect how paid placements are bought and sold.

Would this reduce the amount of available inventory? Would it drive up costs?

Facebook’s VP of global marketing solutions, Carolyn Everson, sought to assuage the marketers and publishers attending AdExchanger’s Industry Preview conference Wednesday.

“The ad game isn’t going to change,” she said. “If you take a real step back, on the ad side of the business, the [ad-ranking] algorithm has always tried to optimize in terms of the value to people.”

As always, she said, the more relevant the creative is to its target audience, the lower the price an advertiser will pay.

“Mark [Zuckerberg] foreshadowed this news feed algorithm change a couple of times over the last few months,” Everson said. “The news feed algorithm change is meant to drive what we call meaningful interactions.”

Facebook defines meaningful interactions as content that elicits a positive reaction from people, and while that typically entails content from friends and family, it could also include brand messaging.

“A meaningful interaction could be and often is a new product or service you want to buy,” Everson said.

So, brands must do a better job figuring out how to create content that resonates.

The initiative is part and parcel with Facebook CEO Mark Zuckerberg’s public 2018 resolution to “fix” Facebook.

The company’s mission used to be connecting people, Everson noted – but that’s not good enough in today’s divided society: “Connecting people to what?”

Cross-Platform Measurement And Other initiatives

Everson also outlined Facebook’s focus on other issues heading into 2018. She anticipated that cross-platform measurement will be a top advertiser request.

“Last year was about getting the third-party verification and getting [accreditation from] the MRC,” she said. With much of that infrastructure work completed, Facebook can focus on building cross-platform measurement and attribution.

The problem is that there isn’t a common system of measurement running across platforms, and that’s an issue Facebook hopes to further address in 2018.

As for other KPIs, such as viewability, Everson noted that traditional companies tend to focus on it more than digital natives.

“When I talk to Netflix, Airbnb and Amazon, they know exactly what happens when they put a dollar into our system,” she said. “The more traditional companies who don’t have a closed loop, who don’t have the end retail data, need to use proxy measures. Viewability verification never comes up with the disruptors, but often with the more traditional companies.”

And if there’s one thing advertisers want from Facebook, it’s access to more data. Everson drew a line: Facebook has no intention of selling data and will protect PII data, a “core foundation of the company.”

She used a football analogy: PII is at the 1-yard line, and that’s where data sharing stops. But, she said, there are “99 other yards of opportunities to work together.”

Those opportunities, she said, include providing enough data so advertisers can measure reach and frequency across campaigns and assess what they are getting for their ad spend on Facebook versus on other platforms or television.

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2018 Will Be a Pivotal Year for Facebook’s Video Ambitions

Last February, during an earnings call with investors, Facebook CEO Mark Zuckerberg outlined why his company was making significant investments in video: “I see video as a megatrend,” Zuckerberg said. “That’s why I’m going to keep putting video first across our family of apps.”

Heeding his word, Facebook ramped up the investment it was making in video throughout the year. Even more so than it did in 2016, when Facebook first started paying publishers and other video makers to create content, Facebook poured a lot of money into becoming a video destination that could rival existing giants such as YouTube and Netflix. In a wave that was reminiscent of how Verizon started cutting checks for its Go90 streaming service, Facebook bought a lot of original content to populate its new YouTube-esque video-viewing section Watch.

But as Verizon has learned with Go90 and Facebook itself learned with its failed efforts to make Facebook Live happen, just because you build something, it doesn’t mean viewers will come in droves. Plenty of Watch shows have the high view counts that the industry has become accustomed to thanks to Facebook’s three-second view metric, but a significant majority of these views are still happening within the news feed, according to multiple publishing sources. As much as Facebook wants users to go to Watch, users haven’t obliged — which has prompted Facebook to push for even bigger projects with bigger budgets for Watch.

But while Facebook has the money to spend — and reportedly plans to spend a billion dollars through 2018 to make its video dreams a reality — the checkbook alone doesn’t build a video-streaming platform. Zuckerberg might envision Facebook as a video-first company in the future, but how Facebook’s video efforts fare in 2018 will do a lot to decide what type of video company Facebook becomes.

Is Facebook trying to be YouTube? Or Netflix?

When Facebook first started licensing shows for Watch, it was primarily seeking short-form series — something Zuckerberg himself acknowledged during the same February earnings call. Facebook declined to specify how many shows it has funded, but it’s safe to say Facebook has commissioned well over a hundred shows from partners that include Attn, BuzzFeed, Group Nine Media, Mashable and Vox Media. A large majority of these shows broadly fit within the unscripted and lifestyle genres — formats that are cheap to produce and appear all over YouTube.

That approach hasn’t panned out for Facebook, which is now telling video sellers it wants bigger shows with bigger budgets in 2018.

“It was very clear that the goal was to kind of build a YouTube-esque video network off the back of the news feed — and that failed,” said a publishing executive at a Watch partner. “They confessed that they were working with a lot of people who did not know how to produce quality video. So now, it’s ‘we don’t want to build YouTube on the back of Facebook, we want to build Netflix on the back of Facebook’ — that’s a far more difficult proposition to be successful at, and it’s a hell of a lot more costly.”

More so than getting users to regularly go to the Watch section on their computers or smartphones, Facebook’s success in this area hinges on convincing people to fire up the Facebook app for connected TV devices. People still want to watch TV shows on TV-sized screens, and that is something they simply do not expect from Facebook right now.

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Facebook acquires streaming rights to sports

Facebook isn’t ready to make a high-profile bid for major sports like basketball, football or soccer in established markets, but it’s eyeing up rights in emerging markets.

One interesting example is Facebook’s move trying to convince UEFA’s media bosses to let it live stream Champions League games in countries where they aren’t shown on TV. Both tournaments are not shown on TV in Africa or countries like India and Colombia. One big fly in the ointment: Facebook wants the rights for free under the idea that it would give the Champions League and Europa League tournaments tremendous reach outside of Europe. Needless to say, UEFA declined.

UEFA cannot be seen giving away rights for free when it has a premium product for which other broadcast partners pay substantial sums. UEFA now finds itself in the same precarious situation as publishers when it comes to assessing the platform dilemma of reach versus monetization.

“It is indeed good to be broadcast on Facebook in a market where the matches aren’t shown on TV,” said the source. “But on the other hand, it could damage negotiations in the future with other TV channels.”

The UEFA pitch is curious since Facebook was willing to pony up $600 million to bring the Indian Premier League cricket matches to the more than 1 billion people who live in India and its surrounding countries.

It is unlikely UEFA’s initial rejection will sap Facebook’s appetite for the rights. With over 650 million people following an account for a sports team, player or news outlet on Facebook and 200 million of these fans on Instagram, Facebook knows it has strong bargaining power now that it is a primary destination for sports. Misha Sher, vp of sport and entertainment at MediaCom, believes it’s only a matter of time before the biggest soccer games air live on Facebook. “Rights holders will need to consider the value that someone like Amazon or Facebook can bring to the table, and explore what types of models will work moving forward without undermining any existing broadcast agreements,” Sher said.

Facebook has made no secret of soccer’s importance to its aspirations as a broadcaster. It aired over 3,500 different live sports events in the first six months of the year alone. Despite the breadth of sports it shows, from American football to college lacrosse, Facebook insists it doesn’t want to replace traditional broadcasters such as Sky and BT Sport as the home of live games. Instead, the social network has cited its deal with Fox Sports to live stream Champions League matches in the U.S. as an example of its intentions over the coming months. If Facebook were to be the sole broadcaster of the Champions League in the U.S. now, it would likely struggle to recoup the $60 million Turner Sports paid to secure the broadcast rights for 2018-2021.

Monetizing video is still a problem for Facebook, as seen by the number of soccer clubs and advertisers rethinking Facebook Live’s value alongside the emergence of Facebook Watch. Monetizing video in emerging markets, however, could be easier; of Facebook’s 5 million advertisers, 70 percent are outside of the U.S. Among the fastest-growing countries are India, Thailand, Brazil, Mexico and Argentina, none of which are set to broadcast Champions League matches on TV between 2018 and 2021.

But this path isn’t without its problems, said Dror Ginzberg, the CEO of video creation platform Wochit. In many emerging markets, smartphone adoption is roughly 30 percent, according to Gsma, the trade body for the telecommunications industry. This is much lower than the global average of over 50 percent. In the short term, this may mean monetization could be slow to happen in these markets, especially as premium content such as the Champions League, regardless of location, is expensive, explained Ginzberg.

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Google and Facebook Exposed to Disruption via GDPR

Substantial parts of Google and Facebook’s business will be disrupted by the EU’s new GDPR data protection rules that are due to apply in May 2018, according to Dr Johnny Ryan PageFair, a company that specialises in helping publishers monetise their inventory in the face of ad-blocking.

Under the new rules, both Google and Facebook will be unable to use the personal data they hold for advertising purposes without user permission. Ryan says this presents an “acute challenge” as they cannot use a service-wide opt-in for everything, in spite of the fact that many commentators have suggested otherwise. Nor will they be able to deny access to their services to users who refuse to opt-in to tracking.

When a person uses Google or, they willingly discloses personal data. Both companies have the right to process these data to provide their services when one asks them to. However, the application of the GDPR will prevent them from using these personal data for any further purpose unless the user permits.

However, it depends what the data will be used for. As Ryan notes, “it will be necessary to ask for consent, or present an opt-out choice, at different times, and for different things. This creates varying levels of risk.”

To explain the varying degrees of exposure to risk, PageFair have devised “The GDPR Scale”:

Google has a Large Number of Products Exposed to GDPR

PageFair’s estimate of Google, when applied to the GDPR scale, shows a significant range of products at four on the scale. However, some part of that set of products can be modified, which would lower their score from four to one, which would put them out of the scope of the regulation.

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Facebook Pages that share false news won’t be able to buy ads

The company has already been working with outside fact-checkers like Snopes and the AP to flag inaccurate news stories. (These aren’t supposed to be stories that are disputed for reasons of opinion or partisanship, but rather outright hoaxes and lies.) It also says that when a story is marked as disputed, the link can can no longer be promoted through Facebook ads.

The next step, which the company is announcing today, involves stopping Pages that regularly share these stories from buying any Facebook ads at all, regardless of whether or not the ad includes a disputed link.

Facebook was criticized last year for its role in helping to spread of fake/false news. (The company is using the term “false news” for now — “fake news” has become heavily politicized and almost meaningless.) Product Director Rod Leathern said the company has been trying to fight back in three ways — ending the economic incentive to post false news stories, slowing the spread of those stories and helping people make more informed decisions when they see a false story.

In this case, Leathern said blocking ad-buying is meant to change the economic incentives. Facebook is concerned that “there are Pages posting this information that are using Facebook Ads to build audiences” to spread false news. By changing the ad policy, Facebook makes it harder for companies to attract that audience.

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Nielsen to Credit Video Views on Facebook, Hulu and YouTube

Broadening its visibility into the world of digital video and OTT distribution, Nielsen said it will begin crediting video content distributed on Facebook, Hulu and YouTube.

That added capability, delivered via Nielsen’s Digital Content Ratings, will enable TV and digital publisher clients to capture viewing of their content within their reported audience numbers, Nielsen said, noting that this “consistent and transparent view ensures a level playing field” because it provides access to the same information across both publishers and platforms.
While enabled publisher clients will be able to receive credit for video offered on Facebook and YouTube in Nielsen’s Digital Content Ratings, Hulu will be providing “select media partners” with credit for current series content that it distributes, Nielsen said.

That expansion follows Nielsen’s announcement last month that “eligible TV viewing” from YouTube TV and Hulu’s new live TV service would be included in its Digital in TV Ratings.

“The inclusion of video content distributed on Facebook, Hulu and YouTube in Nielsen Digital Content Ratings is a major accomplishment and part of our ongoing commitment to providing the industry with independent, comprehensive measurement of the evolving consumer landscape,” Megan Clarken, president of product leadership at Nielsen, said in a statement. “Through capturing this audience, Nielsen is providing publishers, agencies and advertisers with a better picture of today’s media consumption, with comparable metrics.”

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