That giant sucking sound you hear is Google and Facebook vacuuming up online advertising dollars, leaving 99 percent of digital advertising firms to scrounge for crumbs, according to Madison Avenue research.
The eye-opening statistics belie what on the surface is a robust and fast-growing sector.
In 2012, online advertising in the US grew 15.5 percent, to $36.6 billion, up from $31.7 billion the previous year, according to the Interactive Advertising Bureau.
But the two big Silicon Valley giants grab much of that growing pile of cash.
“If you exclude Google and Facebook,” says Brian Wieser, an analyst with data tracker Pivotal Research, “there’s almost no growth. It’s Google uber alles, they’re taking all the share and Yahoo! and AOL have been sucking wind.”
“This runs parallel to the thinking,” Wieser added, “that the top 1 percent has all the wealth.”
For example, when it comes to the $19 billion spent on search, the largest areas of online advertising, Google has an estimated 95 percent share, according to Pivotal.
That disparity — and the slow growth for every company not named Google or Facebook — shapes the start of the 10th annual Advertising Week, which begins Monday.
Sessions embrace topics from creating a start-up, to the moxie that persuaded the NFL to get into involved in advertising male wet wipes, to Facebook executives on how to monetize mobile.
At its outset, low rise jeans were hip and the biggest buzzwords on the Web were “video mash-up.” While spending in the digital space has grown exponentially, one-time stalwarts AOL and Yahoo! have been left on the sidelines — green with envy, perhaps, but certainly not green with exploding ad revenue.
Back in 2003, the online ad business was $7 billion and search was just $2.5 billion, according to Pivotal. Google was just one of handful of players in online advertising alongside Yahoo!, AOL and Microsoft.
Looking back, despite the positive results recently under of cover girl Marissa Mayer, it might seem like the controversial leadership of Terry Semel was Yahoo!’s Golden Age.
Yahoo!’s global gross advertising revenue was $1.322 billion in 2003 boosted by its mid-year acquisition of Overture. In 2012, ad revenue is $4.1 billion.
That’s dwarfed by their former head-to-head rival, Google. Ten years ago, Google ad revenue was $1.42 billion. At the end of last year, under CEO Larry Page, it was super-sized to $43.7 billion — more than 30 times larger.
AOL, still sitting on substantial dial-up revenue in 2003, recorded $787 billion in ad revenue that year. Fast forward to 2012 and it’s $1.42 billion — not even double in 10 years. Meanwhile, Facebook went from zero to $2.2 billion in display ad revenue in 2012.
According to Pivotal data, if you strip out Facebook and Google’s search, display and traffic acquisition costs (TAC), Web advertising stands at just $12.4 billion, an annual growth rate of just 1 percent.