U.S. Digital Ad Market to Grow 16% This Year, Led by Facebook and Google

U.S. Digital Ad Market to Grow 16% This Year, Led by Facebook and Google

Total digital ad spending in the U.S. will increase 16% this year to $83 billion, led by Google’s continued dominance of the search ad market and Facebook’s growing share of display and mobile ads, according to eMarketer’s latest forecast.

Google’s U.S. revenue from digital ads is expected to increase about 15% this year, while Facebook’s will jump 32%, more than previously expected, according to the market research company’s latest forecast report.

But Facebook’s furious growth is also starting to slowly shrink the gap with longtime digital ad king Google. As the overall digital ad industry expands, Google’s share of the U.S. market will shrink slightly to 40.7% in 2017, as Facebook steals share from competitors to reach 19.7% of the market, eMarketer predicts.

Facebook beats Google, Twitter and Yahoo when it comes to display advertising. The social media giant is on track to boost its U.S. display business to $16.33 billion this year, with its market share topping 39%. Instagram is helping drive up Facebook’s mobile business, accounting for 20% of Facebook’s U.S. mobile revenue this year, up from 15% last year, according to eMarketer.

Advertisers are attracted to Facebook’s growth in both usage and engagement, particularly as the social media giant promotes new types of video contentto encourage users to spend more time on Facebook, eMarketer contends.

“Facebook’s users are increasingly captivated by videos on the platform—not just on Facebook but on Instagram as well,” wrote Monica Peart, a forecasting analyst at eMarketer, in the report. “Video, both live and recorded, is a key driver of growing user engagement and advertiser enthusiasm.”

Meanwhile, Twitter’s display ad revenue growth in the U.S. has stalled out and will actually decline 4.7% this year. But the latest social darling, Snapchat, is poised for “explosive growth,” though it will account for only a small piece of the digital ad pie in the U.S., eMarketer expects.

On the heels of the initial public offering by its parent company Snap Inc., Snapchat may boost its ad revenue by 158% to $770 million in the U.S. this year and reach $2.2 billion in 2019.

But the company’s ad business, which is made up entirely of mobile display, isn’t scooting into third place, behind Google and Facebook, just yet. Snapchat will account for 1.3% of the $58 billion U.S. mobile ad market this year, compared with 57% for Facebook and Google combined, according to the forecast.

When it comes to search, Google still reigns supreme. The company’s U.S. search ad revenue in 2017 will grow 16% to $28.55 billion, commanding 78% of the market, as Google continues to steal share from Yahoo and Bing.

“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,” Ms. Peart said in the report.

Google continues to dominate the U.S. mobile ad market, controlling close to one-third of it, while almost one-quarter of mobile ad spending is directed to Facebook.

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