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The increasing dominance of Google and Facebook is the industry trend that advertisers believe will most impact their business this year, according to Marin Software’s recently-released State of Digital Advertising Report [download page]. The study – based on a survey of more than 500 senior performance marketers at companies with at least $40 million in revenues – shows that advertisers are contributing to the growing dominance of the duopoly, despite some concerns.

Indeed, paid social (90%) is the most common form of paid digital advertising used by respondents today, followed by YouTube/Google Display (79%), with a majority (58%) also engaging in paid search advertising. Seven in 10 advertisers plan to have bigger paid social budgets this year compared to last, as do 65% with respect to paid search and 56% with YouTube/Google Display.

All told, respondents are allocating the majority (56%) of their digital advertising budgets to social (29.6%) and paid search (26.4%), with another fifth (19.8%) going to YouTube/Google.

In terms of the duopoly, Facebook-owned properties hog 59.9% of social ad budgets, with 41.3% dedicated to Facebook and 16.3% to Instagram. Google takes about an equal share (59.6%) of search budgets.

This suggests that 35.5% of advertisers’ overall digital budgets go to Google properties, and another 17.7% go to Facebook-owned properties. That may even underestimate the duopoly’s power: recent estimates suggest that 61% of global online advertising dollars went to Google and Facebook last year, up from 47% in 2012.

With that in mind, it’s perhaps not too surprising that marketers are enthusiastic about an alternative. In a new survey of location data buyers [pdf], Factual found that 92% of brands and agencies have concerns about the advertising duopoly, and 71% are seeking alternatives for online advertising.

For its part, Marin Software’s research indicates that the rise of Amazon is the second-most impactful trend identified by digital advertisers. And across advertiser categories, far more respondents view Amazon as a “growth opportunity” than as a “necessary evil.”

Quality Creative is the Biggest Video Advertising Challenge

Video advertising is also one of the key trends that advertisers believe will impact their businesses this year, rivaling the rise of Amazon, voice search and privacy concerns.

Companies are faced with challenges as they pour more money into video advertising, though. Chief among those, according to Marin’s report, is the creation of quality creative. Marin’s analysts note that “the complexity of building innovative ads requires more investment into creative teams when compared to creating standard video ads.” And as recent research into video advertising has revealed, advertisers feel that the underlying reasons for a poor ad experience owe more to issues with creative than anything else.

The other top challenge with video advertising cited in the report is the performance of video compared to other forms of advertising. Advertisers have been saying they need more proof of video ads’ effectiveness in order to spend more, and they have been relatively apathetic on the success of their video efforts to date.

Other Study Highlights

  • The integration of search and social channels is advertisers’ biggest challenge around paid social advertising this year.
  • About 3 in 4 advertisers expect their company’s use of audience targeting within search to either significantly increase (57%) or increase (16%) this year compared to last. The use of audience targeting in Google search ads has been growing rapidly of late, according to recent data from Merkle, which showed that ads targeted to specific audiences accounted for one-third (34%) of search ad clicks at the end of Q1 2018.
  • Mobile in-app advertising is used by fewer advertisers (58%) than several other digital ad formats. The most limiting factor for mobile in-app advertising is budget (32%), per the report, followed by lack of expertise (26%).
  • Asked to select the top 3 priorities for their business marketing function this year from a list of 12, respondents were most likely to cite social media (38%), followed by enhancing the customer experience (35%) and optimizing paid search (33%).

About the Data: Marin’s State of Digital Advertising report is based on a global survey of more than 500 B2B and B2C advertising professionals across the retail, automotive, travel, and finance sectors. Their companies range from $40 million to more than $1 billion in annual sales, with an average annual digital advertising spend of more than $2.4 million. Survey results were collected in April 2018.

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