Magnetic CEO James Green sat down with Marketing Land to discuss the “duopoly dilemma” – how Google and Facebook are dominating the digital ad industry and pushing out the small players. James discusses why the big players are growing so rapidly, and why it is important to look beyond walled gardens to seek value everywhere.
Why are the numbers skewed towards the big players and what should we do? He presents three reasons why there is skewed growth:
Digital ad spending will see double-digit growth each year, soaring to $129 billion in 2021 from $83 billion in 2017, according to eMarketer’s forecast. Much of this growth can be attributed to the shift from TV to digital.
Digital ad expenditures far surpassed TV for the first time last year, and the gap will broaden by roughly $10 billion in 2017. Google (YouTube) and Facebook are uniquely positioned to garner many of these TV ad dollars — along with the likes of Hulu and other digital video providers. So if you’re a little guy (or gal) looking to buy the lowly banner ad, the numbers will shift in your favor.
With Google and Facebook, the systems of metrics are closely known and tightly controlled – so you know where your ad is going to run. Despite a few bumps in the road (like when YouTube showed ads on terrorist sites – yikes), the walled gardens of Facebook and Google are still safer and simpler to measure than the unwashed internet.
However, just because they have the ability to reach so many people, it does not mean that the frequency of reach is very high. So if you want to reach everyone, you’d better be buying elsewhere as well. If you can put systems in place to make sure you can measure your buy, then you can remove the big player advantage and expand your frequency to a large portion of your audience.
For the past 10 years, the media buyer has taken the following route to the media seller:
However, in order to take a more direct path to the publisher, more and more DSPs are connecting directly to agencies. And with so many services becoming increasingly “built in,” far fewer clients need third-party services.
As this consolidation has happened, revenues to these companies have declined — or growth has slowed. All of this has resulted in more dollars to publishers (yay!) and fewer dollars in the ad tech ecosystem outside of the big players.
What should marketers do?
Although buying outside of Google and Facebook is more complicated than buying within them, there are a variety of things you can only get outside of the walled gardens:
Data: If you want more data and the ability to control, manage and analyze it, you have to buy outside Facebook and Google.
Innovation: Much of what is being sold by the largest players was invented outside. If you want to get the next big thing, you’d better keep looking at everybody else.
Performance: You’re always going to get better, more personal attention from someone who wants to be on top. What seems to be happening is that most smart buyers are hedging their bets and putting half of their dollars with big players and the other half with everybody else.
To read the full article, jump over to Marketing Land to see more on what James Green is calling the “consolidation phase” and how smart money will keep searching for value everywhere.
Magnetic is a digital marketing and artificial intelligence company. We use machine learning and AI to deliver smarter, faster, and more effective advertising. Our powerful AI platform continuously analyzes the attributes of 320 million live user profiles alongside real-time inventory supply and bid opportunities to deliver highly performant and profitable campaigns for our clients.