Google, Facebook, and Amazon: The Race for Ad Server Market Share

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For as large as the digital advertising landscape is, there has traditionally been only one company that dominated it: Google. Facebook has consistently taken the runner-up position and over the past year, retail giant Amazon is also taking a piece of the ad server marketing share. 

As a publisher, this is good news! The more competition, the more options you have for monetizing your sites. Here’s what you should know about the programmatic ad industry’s recent transformation from a duopoly to a triopoly.

The Background Information

In 2019, Google and Facebook were responsible for more than 60 percent of all U.S. digital advertising spending and 33 percent of all U.S. advertising spending. Google alone had almost $145 billion in revenue from advertising that same year. For every dollar advertisers spend on programmatic ads, just over half goes to the publisher. The remainder goes to the advertising technology providers that store, buy, sell, and display the ad.

Most display advertising is sold using automatic transactions, like Google Ad Exchange. However, there are some exceptions. To advertise with certain companies, like Facebook and Twitter, brands must purchase directly from the company and use their technology. The same is true for Google-owned YouTube, with ads exclusively available through Google’s ad tech. Google does offer other opportunities for advertisers and publishers to buy and sell display and video ads on the rest of the internet.

Last spring, Facebook closed its web and in-stream placements on Facebook Audience Network. This option allowed advertisers to extend their Facebook ad campaigns to a network of third-party apps and mobile websites. Basing their decision on where they see growing demand from their partners, the move allows Facebook to focus their resources on mobile apps exclusively. 

This update may be in response to recent changes from Google and Apple that limit tracking with third-party cookies in the mobile web environment to address privacy and brand safety issues. Facebook has been reluctant to be transparent about their usage of user data. 

Because of this change, Facebook will have a difficult time surviving in web advertising, which will likely allow Amazon to catch up.

Amazon’s Ad Server Market Share

As a leader in the retail world, Amazon is well-known for its innovative thinking and ability to truly understand what customers want. These insights prove helpful not only on the Amazon site but also in the programmatic ad industry, where Amazon can use that information for effective ad targeting. Like Amazon, Facebook’s success in the ad server market is due to the extensive user data it has from its platform. Users sign into the free platforms, providing Amazon and Facebook with the opportunity to collect information about their buying preferences.

Amazon already operates a sophisticated business in cloud computing services and is known as a header bidding pioneer. The company’s cloud-based header bidding solution makes ad installation and management more straightforward while allowing publishers to accept more offers for their ads at once. Amazon’s method involves individual ad requests at the server level rather than users’ browsers. The solution helps attract more publishers to their platforms and allows less lag time loading pages. Advertisers also benefit by receiving a more even shot at inventory.

The system appears to be working well. In 2019, Amazon’s ad server market share was 7.8 percent, with an increase to almost 13 percent expected by 2023. 

Questioning Google’s Dominance in the Ad Tech Market

Google’s stronghold in the digital advertising market has not come without its challenges. In 2018, Google (along with Facebook) faced controversial allegations that their websites interfered with the U.S. election.

More recently, in 2020, the U.S. Justice Department launched an investigation into whether Alphabet Inc.’s Google abuses its power in the digital ad sales environment. The antitrust lawsuit accuses Google of using its power to stifle competitors and harm consumers through exclusionary agreements. 

A recent report from Australia’s competition regulator reveals potential conflicts of interest across the digital advertising supply chain, dominated by Google. And in the U.S., an Omidyar Network-funded research project into technology platforms details how Google’s conduct could be violating antitrust laws. The research estimates that Google likely earns more than it would in a competitive market. The report includes twenty examples from the complex, opaque ad tech market that support a monopolization case against the company.  

In response, Google says that due to the ad tech market’s competitive environment, advertisers and publishers have a wide range of options. 

Although they were at one point, Google is no longer the first stop on a consumer’s search for a product or service. Almost 60 percent of the time, shoppers seek out Amazon initially rather than Google. Google’s growth in paid clicks is also slowing down. Together, this creates more space for competitors Facebook and Amazon to advance in the ad tech world. For example, the more often consumers begin their searches with Amazon, the more valuable data about their browsing and shopping trends Amazon collects and analyzes. 

In the meantime, however, Google remains the king of digital advertising. Research from firm eMarketer shows that Google accounted for 28.9 percent of the U.S. digital ad share market in 2020, with Facebook, a close runner-up at 25.2 percent.

Ad Server Market Share Key Takeaways

The days of Google being the dominant leader in the programmatic ad industry are long gone. Both Facebook and Amazon are proving themselves as strong competitors, and other smaller rivals such as Snap Inc. are entering the competition. To allow advertisers to buy audiences at scale, smaller publishers are consolidating — like Vox Media’s purchase of New York Media and Vice’s purchase of Refinery29 — to create their own tech and ad-related initiatives.

With a triopoly of competitors in the ad server market — and even more competition on the horizon — this is a great time to be a publisher! To create the best strategy for monetizing your sites, book a demo with our Ad Ops team today.