The Rise of Google, the Ascent of Facebook and the Decline of Everyone Else
If you pay the slightest bit of attention to Internet advertising, you know this. But it's always good to see it spelled out: Look how ginormous Google is! — This exclamation point comes courtesy of Zenith Optimedia …
Context & Ripple Effects
Zenith Optimedia has put numbers on what ad buyers already sensed: Google's share of internet advertising has reached what the firm itself calls ginormous scale, while Facebook is ascending alongside it and effectively everyone else in the category is declining. AllThingsD's framing — that anyone paying attention knew this, but it is good to see it spelled out — marks this as the moment the two-horse market stopped being anecdote and became measured fact.
The significance is less the headline share than the shape of the curve: one incumbent compounding from search intent, one challenger compounding from social graph targeting, and a long tail of sellers caught between them. Independent forecaster data like Zenith Optimedia's is what media buyers and sellers both use to justify budget shifts, so publication of the numbers tends to accelerate the very consolidation it describes.
First-order effects
- Advertisers reallocating 2012 budgets now have third-party confirmation that the scalable reach is concentrated in two places, pushing incremental spend toward Google and Facebook and away from mid-tier ad sellers whose share Zenith Optimedia shows shrinking.
- For the 'everyone else' tier, the immediate effect is pricing pressure: with their aggregate decline documented by a major forecaster, their inventory becomes harder to sell at premium rates against two rivals that can match reach.
Second-order effects
- Mid-sized ad networks and portal-era sellers are pushed toward consolidation or niche differentiation, since the Zenith Optimedia data hands their clients a ready-made argument for shifting budgets to the two leaders.
- Facebook's ascent changes the buyer's calculus from 'Google plus alternatives' to a genuine two-platform allocation, which forces Google to defend advertiser relationships on display and brand budgets it previously did not have to contest.
Third-order effects
- If the pattern holds, internet advertising settles into winner-take-most economics where ownership of user data and targeting capability, rather than inventory volume, determines who captures growth — a structure regulators and publishers alike will eventually have to reckon with.
- Forecaster share tables from firms like Zenith Optimedia become the de facto scoreboard of the industry, meaning the narrative of consolidation can outrun even the underlying dollars as buyers herd toward whatever the data says is winning.
The trend: Internet advertising is consolidating into a two-platform market where Google and Facebook capture the bulk of growth because they alone combine massive audiences with self-serve targeting built on proprietary user data.