Facebook Ad-Spend Growth From National Marketers Is Slowing, Intelligence Firm's Data Shows

Slight cracks might be appearing in the dominance of the digital-advertising duopoly, particularly Facebook, as some data suggests a slowdown in the rate of ad-revenue growth for the giant social platform, as well as a shrinking of the combined Google-Facebook share of the overall advertising pie.

This might be perceived by some legacy media brands as good news as 2018 comes to a close, but the data still shows double-digit-ad growth, even for Facebook, which has endured an unprecedented 12-month run of bad publicity. And the revenue that's shifting from the Google-Facebook duopoly is going to new players, not necessarily to traditional media.

Still, there’s a story in the relative movement of ad spending. The advertising intelligence service Standard Media Index reports that Facebook’s growth from national advertisers (not including local/SMBs) is slowing. In Q1 of this year, SMI reports, Facebook’s year-over-year ad-revenue growth rate was 35%. In Q2, it was 30%. And in Q3, the rate of growth slowed again, to 16%, according to SMI.

That performance also lags the prior year, according to SMI. In the January-October period of 2018, Facebook’s ad revenue from national marketers was up 25% from 2017, but in the same period of 2017, it was up by 41%  over 2016.

“Facebook’s growth from national marketers is slowing, indicating that major brands are concerned with recent events there and are focusing on brand-safe environments,” SMI CEO James Fennessy said this month in a statement. “National marketers don’t have the same issues with platforms like Roku, as we saw their revenues jump by 67% in Q3, albeit from a much smaller base.”

SMI’s data needs to be viewed in context. Facebook will generate an estimated $23 billion in U.S. ad revenue in 2018 (and $54.4 billion globally, an increase of 36.3% from 2017), according to eMarketer. Google is projected to generate nearly $42 billion in U.S. advertising spend. Combined, the two companies are projected to account for about 57.7% of all money spent on digital advertising in 2018, ensuring their continued dominance of the ad industry. The duopoly’s combined share will finish 2018 down from 59.1% in 2017, but they still dwarf the ad spend for entire industries, such as newspapers and magazines.

One big winner for 2018 is Amazon. The online retailer ramped up its advertising dramatically this year, and will generate $4.6 billion in 2018, according to eMarketer. (This is partly due to an accounting change.) By 2020, Amazon will have captured 7.0% share of U.S. digital ad spending, compared with Facebook’s 20.8% and Google’s 35.1%, according to eMarketer’s forecast model.

Looking ahead to 2019, the ad landscape is becoming more competitive and more complicated, not less. And that signals continued disruption for legacy players. Beyond Amazon and second-tier social platforms, such as Snapchat, other tech companies, including Apple and Microsoft, are exploring advertising. Streaming television services, including services like Netflix, which hasn’t relied on advertising, are predicted to jump into the game in 2019. And digital ad fraud remains a huge problem.

It’s too early to predict whether Facebook is at a true inflection point. On the one hand, many advertisers are unmoved. On the other, there are significant rumblings. But the numbers for 2017 and 2018 suggest a challenge that Facebook needs to address.