The Advertising Duopoly is Chasing Away VC Money

Content is king. Whoever owns the channel the content is on wins. That's exactly why Google and Facebook have dominated advertising revenues for the past few years. They own two of the world's biggest 'channels' for digital content and audiences.

What does that mean for their role in advertising? Well, together in 2016 Google and Facebook accounted for 75 per cent of all new online ad spending. In fact in the United States, 85 cents of every new dollar spent on digital went to them in the first quarter alone. 85 cents of every dollar. That other 15 cents represents what the rest of the industry has left to compete for (http://adcontrarian.blogspot.com/2016/10/the-rise-of-digital-oligarchies.html)!

The Financial Times directly attributes this imbalance in the market to a decline in investor interest in ad-tech. Venture financing deals were down 17% in 2016. "The data also showed a 33 per cent drop in the volume of funding in the past year, from $3.2bn to an estimated $2.2bn," Madhumita Murgia, Financial Times European Technology Correspondent writes.

While this presents new challenges, it's not a bad thing. These companies are creating entirely new ecosystems for new ad tech companies to play within.