Traditional Publishers Challenged by Dominant Players in Online Ad Space

Depending on which forecast you believe, digital ad spending  could amount to 20% of all U.S. advertising by 2016.  Which companies stand to make the most in this transition? It’s worth taking a close look at the numbers eMarketer recently compiled on this topic to get an idea of the challenge ahead for traditional media companies.

This year, digital ad spending will reach $37.31 billion. But this is also the year that eMarketer analysts see the annual growth rate in digital ads start slowing – from 16.6% this year to 6.4% annually, by 2016. At that point, eMarketer believes digital ad spending will total $55.25 billion in the U.S. That’s a midrange estimate when compared to the likes of Forrester Research which predicts an online ad scenario $76.6 billion by 2016 or MagnaGlobal which is forecasting a ceiling of $46.94 billion for that same year.

The dominant formats in online advertising can tell us something about which players will control this space regardless of which research shop has the more accurate forecast. In the next 4 years, experts see big shifts in a couple of formats – primarily a big jump in video  at the expense of everything else except rich media and sponsorships. Here’s how the pie will be divided in 2016:

  •  Search 44.2%
  • Banner ads 20.4%
  • Video 14.5%
  • Rich media 5.5%
  • Sponsorships 5.2%
  • Classifieds/​directories 5.3%
  • Lead generation 4.0%
  • Mobile messaging 0.4%
  • Email 0.4%

Currently, 5 companies control 2/3’s of digital ad revenue: Google, Yahoo!, Facebook, Microsoft and AOL. Not surprisingly, Google controls nearly half of that amount — $15.4 billion or 41.3%. By 2014, eMarketer analysts say these industry leaders will still control 2/3’s of digital ad revenue at the following percentages:

  • Google: 43.8%
  • Yahoo!: 6.9%
  • Microsoft: 7.2%
  • Facebook 6.7%
  • AOL: 2.2%

By eMarketer’s calculations, that still leaves $15.85 billion in digital ad revenue to be earned by other companies, especially traditional publishers who are scrambling to shift their revenue streams to a format with a future. But it's not likely that these companies will be dominating new media.

[Source: US Digital Ad Spending. Emarketer​.com. 20 Sept. 2012. Web. 5 Oct. 2012] 
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.