• by John Motavalli , Columnist, November 9, 2016

Depressed by the outcome of the election? Here’s something else to worry you. Just when traditional advertisers are starting to abandon the usual media suspects and going mostly digital, it turns out that all growth in the ad tech industry is coming from two companies. You guessed it: Facebook and Google.

Jason Kint, CEO of the trade organization Digital Content Next, confirmed in an email interview something we had suspected. “The collective analysis shows that the duopoly of Google and Facebook took more than 100% of the incremental growth in digital advertising for the first half of the year." That’s not 85%, which we had cited April 19, quoting a Morgan Stanley analyst. It’s 100%. This begs the question: Is there an ad tech industry, or is there just Facebook and Google?

“The situation is only growing worse as it's tied to the unique ability of these two companies to collect data across the Web, apps and contexts,” Kint continues. “There is also a direct connection between this capability and the rise in ad blocking. As consumers and advertisers demand more accountability to their interests, I expect we'll see pressure towards a healthier market than currently exists.”

Kint had compared data from the Interactive Advertising Bureau with reported results from Google and Facebook back in June and it had it become clear that not only did the rest of ad tech not grow in the first half, but revenue actually shrunk. Revenue for the rest of the industry in the first half declined as much as 5%, according to Brian Wieser, an analyst at Pivotal Research.

According to a chart provided by Digital Content Next, Google’s ad revenue in the first half of this year, $17.4 billion, was almost twice the rest of the industry combined, which amounted to just over $9 billion. That is remarkable — remarkably bizarre. We honestly cannot think of another industry in which one or two companies so totally dominate their competition. If you can think of one, let us know in the remarks section below.

This is not just a trend. It’s a stampede. We should not be surprised, because this analysis is coupled with wholesale cutbacks in the ad tech industry that are as Draconian as those in print publishing.

Let’s list a few of these ominous retrenchments:

• Rubicon is laying off 19% of its workers, 125 people.
• AppNexus laid off 150 in October.
• Even Twitter, once lauded by everybody, said during its third quarter earnings call that it is cutting 9% of its workforce.

All this while Google accounted for 60% of the market’s growth and Facebook over 40%. That doesn’t leave much for anybody else. Warren Lee, a partner at venture capital firm Canaan Investors, told Ad Exchanger that those who want to succeed should “go work for Amazon, Facebook or Snapchat.” Wow, that is depressing.

As a columnist, my job should be to try to figure out where all this is going. And I do think I see what is going to happen. As I have been witness to various seismic tectonic shifts in media, it isn’t hard to figure that out. Nothing that is going on today is going to affect the continued digital advertising dominance of Google and Facebook, with a few other players behind, Snapchat being one of them.

We already see a trend like this in China, where only a handful of huge sites take most of the ad pie. But here, with the promise of multiplicity promised by the ubiquity of the Internet, we expected something different. But we’re not getting it.

Will any of this change under a Trump presidency? Let’s be one of the first to note that Google’s Eric Schmidt was a very vocal supporter of Hillary Clinton, and President-elect Trump is known to be a vindictive guy. According to Wikipedia, Schmidt was an informal advisor and major donor to Barack Obama's 2008 presidential campaign, and “Schmidt became a member of President Obama's transition advisory board and has since become a member of the United States President's Council of Advisors on Science and Technology (PCAST).”

At best, Google is not likely to get a slew of tax breaks and favoritism from a Trump White House. But it doesn’t matter. As Donald Rumsfeld once quipped, you go to war with the army you have, and this ad tech army is just not up to competing with Google and Facebook.