As most rivals stagnate, Google and Facebook still dominate digital ads

Two people texting one another on smartphones.

Google Inc. and Facebook Inc. continue to maintain a firm grip on digital advertising in a market that is expected to hit $83 billion this year, according to the latest report released today by digital research firm eMarketer Inc.

The firm predicts that Google’s share of U.S. digital ad revenue will increase to 40.7 percent this year, which eMarketer notes is double the expected share for Facebook. EMarketer also expects Google’s already commanding share of U.S. search ad revenue to reach 78 percent.

“Google’s dominance in search, especially mobile search, is largely coming from the growing tendency of consumers to turn to their smartphones to look up everything from the details of a product to directions,” said eMarketer forecasting analyst Monica Peart. “Google and mobile search as a whole will continue to benefit from this behavioral shift.”

Although Facebook lags behind Google in terms of total market share, eMarketer is quick to point out that the social network has become the go-to platform for display ads, and the firm expects Facebook to gross $16.33 billion from advertising this year. In addition, eMarketer said Facebook will hold 39.1 percent of the more fragmented U.S. display ad market, taking share away from Google and others. The firm also said Facebook’s Instagram photo sharing app will account for an even larger portion of Facebook’s ad revenues this year.

“Facebook’s users are increasingly captivated by videos on the platform—not just on Facebook, but on Instagram as well,” said Peart. “Video, both live and recorded, is a key driver of growing user engagement and advertiser enthusiasm.”

Google and Facebook will continue to dominate the digital ad market, but eMarketer said Snapchat, hot off its recent initial public offering of stock, is set for major growth this year. Snapchat’s ad revenue will be slightly lower than eMarketer’s original $800 million prediction because of higher-than-expected revenue sharing with partners. But eMarketer still predicts that Snapchat’s ad business will grow by almost 158 percent, to $770 million, in the U.S. this year.

Even with its stellar growth, Snapchat will not come anywhere close to matching Google or Facebook, but eMarketer predicts that Snapchat’s market share will more than double in the near future, reaching 2.7 percent by 2019.

eMarketer expects ad revenue to grow for several companies, but the outlook is not so good for Twitter Inc. According to eMarketer, Twitter’s ad revenue will drop to $1.3 billion this year, a more than 4 percent decline from last year.

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