Who Will Win The Digital Media War?

By Eric Picard (originally published in AdExchanger October 17th, 2013)

Lately I’ve had many conversations about the digital advertising market and how it’s evolving.

The most-asked question: “Who will win the battle over digital advertising – Google, Facebook or Twitter?”

I’ve also recently been asked about other companies, such as LinkedIn and Adobe, and how well they’re positioned to beat “whomever.” And by “whomever,” everyone almost always means Google. But more often lately, I’m hearing about Facebook, too.

So, who’s going to win?

Well, it’s not so simple. I take a very different view of the market. I don’t believe there will ever be one winner in this space. Even from an ad-technology perspective, I don’t think all roads point to Google owning it all – although there’s little question that they dominate. And from a publisher perspective, Google is dominant in paid search but not in other areas.

I can hear your brain spinning right now. You’re thinking, “Wait – did you say Google is a publisher?”

Yes, I did. Google has leveraged a massive market share in paid search, and grown into other forms of advertising as well. But for some reason, people in our space don’t seem to think of Google as a publisher.

Google happens to be the biggest publisher of search – but, somehow, calling Google a search engine seems to mask for many people that Google is a publisher. They also are a publisher of maps with Google Maps. They publish video via YouTube. And they publish all sorts of other content related to the results of various vertical searches, including restaurant reviews and travel information.

Google’s also a technology company, and yet – amid all the excitement about various office applications, self-driving cars, balloon-based Wi-Fi and all the other efforts – they are primarily a publisher, one that makes almost all of its money from the sale of advertising. Even their massive DoubleClick business is in many ways really about building opportunities for more ad revenue flowing through their ad exchange and back to Google, tied to a percentage of media spending.

But even though they can almost legally be considered a monopoly, they are not the only publisher in search. Microsoft certainly hasn’t given up there. And beyond the two major publishers of search, there’s an entire ecosystem around paid search that Google can’t and won’t own. That opens up other opportunities.

A Range Of Opportunities – For Many Players

I see the market as a series of opportunities. Even if Google continues to be the dominant player across all forms of digital advertising, from a publisher or an ad-technology perspective, I don’t think that matters from a market perspective because the publisher space is far too fragmented for any one publisher to gain control. Any one publisher may dominate in one area, but won’t be a complete monopoly – not even in search. It’s even much less likely in other forms of media.

So when people talk about who’s going to “win” in advertising, I think it’s more complex than one winner and many losers. There are many opportunities to win here. And many of these markets are more than big enough for the “second-place” player to have a very big business indeed. In many cases, there will be a large number of big businesses in various verticals. Television is a great example of a market where there are many big players and no one player that has significantly dominated the market, at least not in the way we think of Google dominating search.

So what are the other areas we should be paying attention to? These areas could be very large – potentially as large as paid search – but at least as large as display ads or radio.

1. Consumer-Facing Social Media

Publishers: Obviously Facebook will dominate here. This means Twitter has the backup position in this market. Facebook is too far ahead for Twitter to come close any time soon. I think that Google+ is an outlier and could blow up at some point if Google keeps at it and really invests heavily, maybe in advertising Google+ rather than trying to gain share more organically.

Technology: There are tons of players, but nobody is dominant yet. And every major player wants to be the big gun here. I expect that, eventually, Google, Adobe and Salesforce will dominate, either through organic growth or acquisition. There are a lot of smaller players who could rise quickly depending on how innovative they prove and how good they are at executing.

Secondary Marketplaces: I think AppNexus will win. Others will play.

2. B2B Social Media

Publishers: Clearly, this belongs to LinkedIn. Google+, Facebook and Twitter will also play here, but it’s uncertain how much market penetration they’ll achieve. I’d guess that Twitter has a good opportunity to be bigger here than in the consumer space as a secondary player.

Technology: Again – too early to know. I like Rallyverse quite a lot, although they’re playing in several places here.

Secondary Marketplaces: Too early to be certain.

3.  Video / TV over IP

Publishers: Obviously Hulu is a standout. You can’t ignore YouTube, either. Netflix and Amazon are very focused, and Microsoft’s Xbox is super interesting. But video and television content over the Internet is very fragmented, and I don’t see one strong winner.

Technology: Freewheel seems to be getting tons of traction (quietly, too).

Secondary Marketplaces: Clearly Google’s got a good foothold because of its anchor-tenant relationship with YouTube. Tremor had a great IPO, and there are many players like TubeMogul, YuMe and Brightroll – but this space looks to be about as fragmented as the television ecosystem, or even display ads. Part of the reason is just that there’s a lot of demand and money floating out there looking to be spent on video advertising.

4. Mobile

Publishers: Mobile is not a media type. Well, sorta. But it’s not a media type that so far is significantly differentiated as one. I suppose you could point at Apple and Google (as leaders?) for their app and content marketplaces.

Technology: This part of the market is super fragmented.

Secondary Marketplaces: I’m looking forward to Google and AppNexus duking it out over this marketplace from the exchange point of view – but there are many ad networks in this space as well, including Millennial Media, which is clearly the powerhouse of the market.

5. Cross-Media Plays

Let me break out of my model for a moment and say that while the market has certainly fragmented into players focused on each of the various channels, I think we’re now starting to see a lot of investment in cross-media initiatives. These range from publishers to technology companies and marketplaces.

But the real interesting thing to me is that in the ad-technology space we’ve rarely seen the ability for companies to support multiple media types simultaneously and become a dominant player. That is changing.

Publishers: Google, Yahoo – yes, I said Yahoo – Microsoft, Amazon, Apple, AOL and a plethora of others are starting to gain real cross-media traction. I don’t see any one publisher dominating across media, but certainly there will be publishers who stand out because of their cross-media footprint.

Technology: Obviously Google stands out here. But watch out for AppNexus, which is really investing heavily in video, mobile and social to extend beyond its display roots.

Secondary Marketplaces: Again – I think it’s Google and AppNexus that are really poised to win here.

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