In a historic shift for the industry, last year digital ad spend surpassed traditional TV spend for the first time, capturing 41% of the market versus 35% for TV. TV’s waning dominance can be attributed to a variety of factors, including increasingly disinterested and fragmented audiences, cost-prohibitive rates, and heavy ad loads. Perhaps most important to advertisers is that traditional TV simply isn’t measurable. It’s not surprising, then, that the industry began shifting to digital—and, to a large degree, specifically to Facebook and Google.
According to MediaPost, this duopoly captured between 60% and 70% of the US digital media market in 2017. What initially seemed like an ideal solution (investing in large and reputable companies) is proving to be less than a silver bullet. And if the shift from TV to digital has taught us anything, it’s that advertisers would do well to diversify their spend and embrace other formats.
Just as the industry gradually shifted from TV to digital, forward-thinking marketers must now go beyond Facebook and Google. As with financial investments, diversifying one’s portfolio is crucial to reducing risk, and relying on any one platform or revenue stream can have negative consequences. While Facebook and Google still dominate, the past year has shown us that the two giants may be at an inflection point. eMarketer estimates the duopoly will make up a combined 56.8% of US digital ad investment in 2018, decreasing from 58.5% last year. Google and Facebook’s share of new digital ad dollars is also declining, as the two companies are projected to garner only about 48% of new expenditures this year compared to about 73% in 2016.
A number of reasons contribute to this shift. Even before Cambridge Analytica, advertisers were rightfully wary of the proprietary, black-box nature of Facebook’s reporting. Take, for example, the recent spate of measurement errors where the company admitted to faulty reporting of key ad measurement metrics, ranging from view counts to organic reach. Perhaps most pressingly, brand safety continues to be a massive concern: last year, over 250 brands including Johnson & Johnson and Procter & Gamble pulled hundreds of million dollars in spend from Google following reports of their ads appearing against inappropriate and/or violent content. Furthermore, from a trafficking standpoint, publishers are finding that they can rely less on Facebook to drive website visits. Vogue, for example, has cut down its Facebook spend as the tech company’s referral traffic significantly declined. The perennial need for premium, brand-safe, and cost-efficient placements and inventory will mean that advertisers and publishers alike must wean themselves of their reliance on the two media giants.
Fortunately, there’s a scalable, addressable market that responds to these concerns: mobile games. Despite being a $50 billion industry (larger than Hollywood’s global 2017 box office revenue), mobile gaming is a relatively untapped opportunity for brand advertisers. 25% of all apps downloaded from iTunes and Google Play are games, making it by far the most popular category. Additionally, people report feeling more engaged, relaxed, and happy spending time with mobile games compared to social media. This is important because those in a positive mood are found to be 40% more receptive to digital ads. There are currently over 800,000 active mobile games, and most are privately held, so there is less pressure to overload on ads and risk user attrition. As a result, most ads appear full-screen, with 100% share of voice—a rarity with other forms of in-app content.
Another benefit of in-game advertising is value exchange—a.k.a. opt-in—ad placements, which reach the right audiences without interrupting them. With value exchange, people access entertainment content, points, or other digital content in exchange for watching ads. This format outperforms standard video formats while offering superior targeting, viewability, and brand safety. In 2017, for example, the average 30-second video had a 77% completion rate, a 0.54% click-through rate, and was 73% viewable. Value exchange ads delivered a 91% video completion rate, a 2-8% post-view engagement rate, and were favored 3 times more by viewers than non-skippable pre-roll ads. Lastly, a study conducted by Nielsen Media Labs found that value exchange ad units drove a 26.4% increase in purchase intent, surpassing the Nielsen Digital Brand Effect Mobile benchmark by nearly 5x.
Contrary to popular belief, the mobile gaming world is not limited to adolescent boys blasting zombies. Over 20% of mobile game players are over the age of 50, and 60% of all US mobile game players are women. Mobile casual games are especially popular, reaching over 200 million people in the US. With the explosive popularity of games like HQ and Pokemon GO, brands ranging from Kia to MillerCoors to Microsoft are taking note. Expect digital media buyers to increasingly shift dollars to new areas, such as mobile games, that can differentiate themselves from the duopoly’s offerings. While Facebook and Google offer great targeting and access to unique inventory, marketers are limited in their ability to extract data from campaigns for future use on other platforms—a key component of any media plan. At the end of the day, transparency is key, and marketers need the ability to analyze their efforts much more robustly. Fortunately, mobile games fill in the gaps where the duopoly falls short, offering a truly engaged audience, brand safety, better measurement, and high performance. And though the duopoly isn’t going anywhere soon, advertisers should anticipate and be ready to embrace the emergence of alternative options. From the rise of Amazon, Snapchat, and Verizon, to the prevalence of mobile games, the future beyond the duopoly looks bright.