Google and Facebook swat off threats and tighten grip

Google and Facebook may be under greater scrutiny than ever but their domination of the UK digital ad market shows no sign of abating, with a new forecast predicting the two tech giants will account for 68.5% of the £14.56bn UK industry in 2019.

So far this year, Google has been fined €1.49bn (£1.35bn) by Brussels for abusing its monopoly in online advertising, although it is appealing, while the Irish Data Protection Commission has a hatful of investigations into Facebook over potential breaches of GDPR.

Meanwhile, the Competition & Markets Authority launched its probe in July which will examine concerns about how online networks are using people’s personal data, including “whether making this data available to advertisers in return for payment is producing good outcomes for consumers”.

The regulator will also investigate whether there has been any abuse of power by the duopoly but according to eMarketer’s latest forecast, their share of the UK market will surpass 70% by 2021.

eMarketer forecasting director Shelleen Shum said: “Despite economic uncertainty due to Brexit, Google’s and Facebook’s ad revenues continue to grow at the expense of smaller players. When budgets are tight, advertisers tend to favour tried-and-true platforms that, on average, provide better measurement statistics and assurances against fraud.”

In 2019, Google’s net UK digital ad revenues will grow 10.0% to reach £6.20bn. While that will decrease its share of the UK digital ad market to 42.6% this year, standing at 40.5% by 2021 both figures are higher than eMarketer’s original forecasts of 38.8% and 36.7%, respectively.

Shum added: “Even though Google’s share will decline slightly over time, there’s no sign that it will lose its dominance in the UK market in the foreseeable future. Search remains a central, intuitive habit for all Internet users, and Google still has that covered.”

The lion’s share (83.4%) of Google’s revenues come from its search business. Google’s search will grow about 10% this year, capturing a staggering 79.9% of the UK search ad market.

And Google’s share of the worldwide digital ad market continues to rise. eMarketer forecasts it will grow to 32.0% in 2019, up from 31.4% last year. Google’s worldwide net digital ad revenues will total $105.33bn, surpassing $100bn for the first time.

Meanwhile, Facebook’s net digital ad revenues will grow 25.6% this year to reach £3.77bn. As a result, its share of total digital ad spending will swell to 25.9% this year, higher than the 24.5% previously forecast. Unlike Google, Facebook’s share continues to grow; it will surpass 30% of the UK digital ad market by 2021, eMarketer reckons.

The social media giant also commands an 86.7% share of social network ad spending in the UK, far higher than that of any competitor. For reference, Twitter has a 4.7% share, and Snapchat follows with 2.8%.

Facebook ad revenues are derived entirely from display advertising. This year, it will capture 58.5% of UK display ad spending, reaching 60.5% next year.

Whether the CMA can stifle that, remains to be seen.