When it comes to online advertising, the winner takes most. That’s the stark reality that companies are up against, according to a new report from Morgan Stanley.
The report, titled “Winner Takes Most in Online Advertising,” found that the top three players in online advertising — Google, Facebook and Alibaba — control nearly 75% of the global market. And it’s only going to get more concentrated from here.
“We believe the online ad market is at an inflection point and about to become more concentrated, with even greater share shifts to the top three platforms,” said Brian Nowak, Morgan Stanley’s lead internet equity analyst.
Here’s a look at the state of the online advertising market:
The global online ad market is expected to grow 18% this year to $335 billion. That’s up from $284 billion last year and $140 billion in 2013.
Google and Facebook will account for nearly 60% of that growth, according to Morgan Stanley estimates. The duo is expected to take in a combined $160 billion in ad revenue this year, up from $140 billion last year.
Alibaba is alsoexpected to see strong growth, with ad revenue increasing 45% this year to $23 billion. The Chinese e-commerce giant is quickly closing the gap with its U.S. counterparts.
The three companies are benefiting from a virtuous cycle of users, engagement and advertiser dollars. They are also using their massive user bases and sophisticated data targeting capabilities to lure more advertisers away from traditional television and print outlets.
