With its rapid penetration worldwide, the internet is poised to outpace all other media in drawing advertisement revenues. And that’s catapulting Silicon Valley’s leading digital players to rule the mass media market – globally. According to a report by media agency Zenith, Alphabet and Facebook have emerged as the two biggest media owners in the world in 2016 – thanks to their burgeoning presence in the global advertising market.
Raking in $79.4 billion in ad revenues, Google earned the top spot for its parent company in Zenith’s ‘Top Thirty Global Media Owners’ for 2016. Following Google, Facebook comes in with $26.9 billion. Together, the two digital behemoths accounted for 20% of global ad revenues spend in 2016 – up from 11% in 2012. (According to Zenith’s report)
From 2012 through 2016, Google’s ad revenues have soared around +82% (at CAGR +16%) and Facebook’s risen more than +525% (at CAGR +58.2%) (Statista data)
Is Internet Set to Rule Advertisement Market?
It’s no secret that mobile gadgets and desktops are fast taking over traditional mediums like TV and print in garnering audience growth and user engagement. And, that’s something U.S.-based internet giants are milking, their gargantuan user base serves as the perfect bait for pulling in advertising dollars. This year, the internet is expected to grab the biggest slice in the global ad revenue market at 36.9%, outpacing television and other traditional mediums, as suggested by Zenith’s Advertisement Expenditure Forecasts as of March 2017
A potential shot-in-the-arm for the leading U.S-based digital firms’ share in the global media market is their rapidly expanding international reach. As of December 2012, Facebook’s number of monthly active users (MAU) outside the U.S. & Canada was 863 million; that surged to 1.6 billion as of December 2016. The social networking site’s advertising revenues outside the U.S. & Canada increased +502% (CAGR +57%) between 2012 and 2016.
Bottom Line for Investors
Google and Facebook together make up the top spots in the global media industry, thereby reaffirming the internet’s growing clout in the ad spend market. With the internet projected to soon beat every other medium in the global race for advertisement dollars, it shouldn’t be a surprise to see the battle among digital players only intensify going forward, potentially pushing more traditional media companies to raise their digital presence.
As competition in the industry heats up, it becomes all the more crucial for an investor to understand every firm’s prospects relative to others in that industry. At Zacks Investment Management, we can help you stay up-to-date on such prospects for various sectors including technology/media, and also guide you towards building a portfolio suited to your risk tolerance and financial goals. To know more, call us at 312-265-9312.
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