Facebook adds a million advertisers in 7 months
(BI Intelligence)
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More than 5 million businesses are advertising on Facebook each month, Reuters reports.
That is up from 4 million monthly advertisers in September 2016, and the 3 million monthly advertisers it had in March 2016.
Facebook is one of two undisputed titans in digital advertising. Alongside Google, the company is expected to generate a little under half of online ad spend in 2018, expects eMarketer. Facebook generated close to $27 billion, and Google close to $80 billion, in ad revenue last year. AOL (soon to be combined with Yahoo), Amazon, and Snapchat are in the next tier of digital ad players, but their businesses remain a fraction of the size of Google and Facebook.
Small and midsize brands are flocking to advertise on Facebook. Big brands may drive the bulk of revenue in advertising markets, but there is still ample opportunity for growth along the long-tail of smaller brand advertisers. The sheer volume of advertisers on Facebook reflects the company’s success in attracting these smaller firms its platform. But significant upside remains—Facebook’s 5 million advertisers are just 8% of the 65 million businesses that are active on the network.
A few industries are generating the bulk of Facebook ad spend. E-commerce and retail, and entertainment and media are the biggest industries represented in Facebook's advertiser base. Products sold in these industries complement Facebook’s platform (compared to, say, automotive advertising). The social network can target people precisely, link out to e-commerce sites and has its own native shopping functionalities, and is also perfect for viral sharing of media.
The fastest-growing markets, not surprisingly, are all overseas. Facebook is doing a great job at building its advertising base overseas — over 75% of advertisers are outside of the US. India, Thailand, Brazil, Mexico and Argentina are the fastest-growing markets. It’s unclear whether is counting growth in terms of ad spend or advertiser additions, but it’s likely the latter. All but Argentina from the above mentioned markets are in Facebook’s top-10 countries by user base.
Mobile usability a big focus for Facebook to grow advertisers. The company is adding more tools to facilitate make advertising on mobile devices easier, including an update to the Ads Manager app. Almost 50% of advertisers create ads on mobile devices. More than 90% of Facebook users access the network via mobile. And mobile advertising accounts for 84% of ad revenue. Creating mobile-first experiences is particularly key in emerging markets.
There's no question that consumers are increasing the amount of time they spend consuming digital media, while advertisers are increasing their ad budgets into digital channels. What may come as a surprise, however, is the complexity of the interconnected web of companies involved in the process of delivering digital advertisements to end users. Collectively, these companies are known as “advertising technology,” or “ad tech” for short.
Ad tech companies are intermediaries between advertisers and publishers, and add value to the ad delivery process by consolidating inventory, automating workflows, and offering precise targeting capabilities at scale. The automation of ad buying is also known as “programmatic advertising” — that is, using technology and software to buy digital ads. Programmatic ad spend in the US is quickly ramping up: It will top $20 billion this year and reach $38.5 billion by year-end 2020.
But ad tech's ascendancy isn’t without its drawbacks. The advertising industry in the US is dominated by two main players: Facebook and Google. As a result, ad tech players are fighting for a pretty small piece of revenue pie, one of the many drivers of increased consolidation in the space.
Kevin Gallagher, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on ad tech that examines the different players involved in the process of delivering ads, the formats that are driving growth (notably mobile and video), and the factors that are driving increased consolidation over the coming years.
Here are some key points from the report:
By 2020, mobile will be the biggest online advertising market, and video the fastest growing.
So-called "walled gardens" Google and Facebook lead a relatively small group of players that attract the vast majority of digital-ad spending in the US today.
Growth can be challenging for players outside the walled-garden duopoly, and many companies are reaching a level of maturity that may prompt investors to push for an exit.
Ad tech is poised for consolidation, and the number of companies in the industry will decline significantly over the next few years.
Companies specializing in certain ad formats like mobile, video, and TV are attractive targets. They are well positioned to take advantage of the fastest growing segments of digital media.
In full, the report:
Forecasts US programmatic revenue through 2020.
Highlights the factors driving consolidation, and identifies new acquirers and attractive targets.
Explores the challenges ad tech companies face including the dominance of walled gardens, ad blocking and measurement.
Outlines emerging technologies that will help propel ad growth in the next decade.
Interested in getting the full report? Here are two ways to access it:
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