Notably, eMarketer cut its U.S. ad revenue forecast for Snap Inc. (SNAP) by $30 million to $770 million, due to higher-than-expected revenue-sharing payments with ad partners. The revised figure still represents 158% annual growth, but it's worth noting Snap only began seriously monetizing its app last year. The company, whose ad sales depend heavily on the U.S. for now, reportedly has a goal of producing over $1 billion in global ad revenue this year. Shares fell 2.8% to $20.51 on Tuesday, making new post-IPO lows.
When looking at the factors behind Google/Facebook's dominance, one has to start with the fact that the companies dominate mobile app rankings -- Nielsen believes Google and Facebook had all eight of the most popular U.S. smartphone apps last year in terms of unique users. Next, consider that smartphone apps and browsing now account for over half of all the time spent online, with U.S. consumers spending about 5 hours per day on their phones.
The desire among many brand advertisers to direct the lion's share of their online ad platforms with massive scale also works in Google and Facebook's benefit. And so does each company's healthy exposure to a fast-growing online video ad market -- Google via YouTube, which is now responsible for one billion daily hours of global video viewing, Facebook via its news feed and Instagram video ads. Facebook just added support for ads that appear in the middle of videos, and is getting serious about making TV show-like programming available through its core app.
Facebook's ad sales boom also has much to do with how its user data and ad targeting/measurement abilities put those of many display ad rivals (including, in some instances, Google's) to shame. Users constantly share their demographic info, employment data and likes/preferences with the company, and Facebook has created powerful tools such as Custom Audiences and Lookalike Audiences to help advertisers leverage it. It has also done a good job of creating compelling ad formats, such as its immersive Canvas Ads and its shopping-focused Dynamic Product Ads.
Google Search, meanwhile, remains unmatched when it comes to knowing what someone is interested in buying at a particular moment, which in many cases is different than what his or her demographic info and likes might suggest an interest in. And while the rise of popular e-commerce apps remains a threat, since users might go directly to an app rather than search for a product, this has been partly offset by the integration of Google Search with Android, Chrome and Apple's Mobile Safari browser.