Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) subsidiary Google and dominant social network Facebook (NASDAQ: FB) have long had much of the digital ad market on lockdown, overshadowing smaller rivals. However, those rivals are expected to start finally chipping away at that duopoly for the first time, although one of the competitors isn't exactly small: Amazon.com (NASDAQ: AMZN).
The e-commerce titan's ad business has been steadily growing and is already having a big impact on the bottom line. Meanwhile, Snap is making some progress with its ad business, despite other challenges at the Snapchat parent.
Chipping away at the duopoly
eMarketer released fresh estimates today that predict how Google's and Facebook's combined share of digital ad spending is expected to play out in the years ahead.
The ad market researcher notes that the two companies are also grabbing a smaller share of new ad spending, forecast at 48% this year. That's far below the 73% of new ad spending that Google and Facebook collectively garnered in 2016.
While Facebook's core service has mostly matured in the important North American market -- daily active users (DAUs) declined modestly for the first time ever last quarter -- its Instagram service is "rapidly" growing its advertiser base, according to eMarketer. That will make the photo/video sharing service an even more important growth driver, bringing in an estimated $5.5 billion in ad revenue this year.
Amazon continues to make steady progress in growing its ad business, with eMarketer forecasting 63.5% growth in U.S. ad revenue this year. The company might be able to break $2 billion in ad revenue for the first time, which would be enough to grab a modest 2.7% share of the U.S. ad market. That might not sound like a meaningful piece of the market, but keep in mind that Amazon is a fierce rival that plays the long game, and Google considers the company its primary competitor.
On the fourth-quarter earnings call last month, Amazon CFO Brian Olsavsky noted, "Advertising was also a key contributor [to profitability] as we're continuing to make the offerings more valuable, both to customers and advertisers alike."
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Evan Niu, CFA owns shares of Facebook. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, and Facebook. The Motley Fool has a disclosure policy.