The amount of money going to U.S. digital advertising in 2017 is expected to increase nearly 16%, reaching $83 billion, with Alphabet Inc.’s (GOOG) Google and Facebook Inc. (FB) being the main beneficiaries of the increased spending.
That’s according to market research firm eMarketer, which said in a report Tuesday that, overall ,Google will still be the leader in terms of digital ad dollars, accounting for 40.7% of the U.S. share this year. While that is more than double Facebook’s piece of the pie, Facebook is leading in display ads.
Google Still Leads
eMarketer is forecasting Facebook’s display-ad business in the U.S. will increase 32.1% this year, hitting $16.33 billion ,with Facebook accounting for 39.1% of the market share. eMarketer said the growth in ad spending on Facebook can be attributed to an increase in the number of users and the time the users are spending on the social network, which in turn draws more advertisers. What’s more, eMarketer said Instagram is driving growth in advertising for Facebook. eMarketer is forecasting Instagram will represent 20% of Facebook’s mobile revenue this year, which is up from 15% a year ago. Google’s display-ad revenue is forecast to increase to $5.24 billion, but its market share will decline 12.5%. “Facebook’s users are increasingly captivated by videos on the platform—not just on Facebook, but on Instagram as well. Video, both live and recorded, is a key driver of growing user engagement and advertiser enthusiasm,” said eMarketer forecasting analyst Monica Peart in a report. (See also: Facebook B2B Campaign to Court Video Advertisers.)
As for advertising spending in the search market, eMarketer said Google’s market share will increase 16.1% to $28.55 billion in 2017, with Google claiming close to 78% of the total search ad revenue in the U.S. this year. “Google’s dominance in search, especially mobile search, is largely coming from the growing tendency of consumers to turn to their smartphones to look up everything from the details of a product to directions,” said Peart. “Google and mobile search as a whole will continue to benefit from this behavioral shift.”
As for newly public Snap Inc.’s (SNAP) Snapchat, eMarketer said the messaging app is poised for “explosive growth” in 2017 with ad revenue increasing 157.8% to $770 million in the U.S. That below the $800 million eMarketer previously forecast because of higher-than-expected revenue sharing with Snap partners. eMarketer said Snapchat will represent 1.3% of the mobile ad market in the U.S. this year, with that growing to 2.7% by 2019.