The duopoly, however, is now facing increasing competition from e-commerce, OTT video, and short-form video platforms, say experts Tech giants Google and Facebook collectively generated Rs 18,054.9 crore in gross advertising sales for the financial year ended 31st March 2020. This is a big jump from Rs 11,456.7 crore that the two companies reported in the previous fiscal. These figures are based on the FY20 regulatory filings of Google India and Facebook India Online Services that have been shared by business intelligence platform Tofler. Google accounted for lion's share of digital advertising in India with gross ad sales of Rs 11,442.3 crore in FY20 compared to Rs 9,203 crore in FY19. Facebook has seen a massive jump in its gross ad billing at Rs 6,612.6 crore in FY20 compared to Rs 2,253.7 crore a year ago. However, their net ad revenue is a very small percentage of their gross ad billings as both companies have to purchase ad space from their fellow subsidiaries.   Google India had paid Rs 10,070.2 crore to Google Asia Pacific Pte. Ltd. in FY20 for purchase of service relating to advertising space as against Rs 8105.9 crore in the previous fiscal. Similarly, Facebook India Online Services bought Rs 6067.9 crore worth of advertising inventory in FY20 from Facebook Ireland compared to Rs 1969.9 crore in FY19. Google and Facebook's FY20 net ad revenue stood at Rs 1372.1 crore and Rs 520.4 crore, respectively. In FY19, the net ad revenue stood at Rs 1097.1 crore and Rs 263.9 crore respectively. In a regulatory filing, Facebook noted that it pays for advertising inventory to other related parties in accordance with an advertising reseller agreement. Both Google and Facebook India Online Services act as re-sellers of ad space on behalf of their fellow subsidiaries. In FY20, the India units of Google and Facebook had paid an equalisation levy of Rs 604 crore and Rs 369.5 crore respectively. Foreign digital companies have to pay a 6% equalisation levy on gross payments received from Indian residents for online advertising. The gross advertising numbers reflect the duopoly nature of the Indian digital ad market. However, the duopoly is now facing increasing competition from e-commerce, OTT video, and short-form video platforms, say experts. dentsu Asia Pacific (APAC) Chief Data & Product Officer & dentsu Programmatic - South Asia CEO Gautam Mehra said that the Google-Facebook duopoly has existed for a few years now and it’s still very strong. He further stated that they both have huge amounts of user data that is fed into their advanced engines to produce superior ROI for brands and hence, they have well earned their place in this pie. "However, we also do see brands and advertisers increasing spends on other platforms as well. Programmatic has risen multi-fold in the past three years and is continuing to grow faster than other digital channels. OTT is another area that has grown tremendously and we see a lot of advertiser interest in them to continue. For the next three-five years of digital, it's not a zero-sum game, so per cent of spends matter less and absolute increase in investments should be looked at," Mehra stated. Mehra also said that the traditional media platforms have a lot of worry about the growing clout of Google and Facebook. "If one sees AdEx, it’s clear that digital has eaten into print’s pie already. It’s not just media companies, today governments across the world are wary of the amount of influence of these two platforms, so a few traditional media companies should definitely have a plan of action to take them on." He also feels that Amazon/Flipkart will see a positive impact as brands spend more money on performance marketing. "Like I said, it’s not a zero-sum game for digital. If the GDP grows as predicted, AdEx will grow in general. Also, for digital, there are plenty of other lesser efficient mediums that are yielding their budgets to play with. For example, performance marketing money doesn’t move from Google to OTT, TV budgets do. Having said that, Amazon is becoming stronger in the performance space (where Google & Facebook dominate) and with more and more brands going D2C, Amazon/Flipkart should see a positive impact," said Mehra. Mirum India Joint CEO Hareesh Tibrewala noted that Google and Facebook will continue to dominate the digital advertising space. He also opined that e-commerce major Amazon is an emerging giant in digital advertising. Going forward, he feels that the duopoly will give way to a triopoly of Google-Facebook-Amazon. "There is the Google ecosystem which is ‘intent’ driven; there is another ecosystem Facebook, which is behaviour driven; and now we are going to be seeing a third ecosystem Amazon, which is transaction driven. Covid has hugely escalated movement of brands to online sales channels and every brand, big or small now realises the need to be able to sell to the customer online," Tibrewala said. "Thus, I foresee Amazon becoming an integral part of media plans for 2021. Amazon has a complete bidding system and its own nuances of how to get a product placed in front of the customer. And while this bidding system is not as sophisticated as that of Google, I am sure it will evolve quickly. Thus I see the Google-Facebook-Amazon as the trio that will have the dominant share of digital advertising." Apart from the trio, the digital industry will also have a long tail of platforms vying for a slice of the digital ad market. "Media industry has always had a few dominant players and large long-tail players. OTTs are quickly picking up pace in this category. And so is influencer marketing," Tibrewala said. Xaxis India country head Bharat Khatri said that the duopoly is a problem not just in India but globally also. He also pointed out that their dominance is under threat particularly in developed markets like the US and UK. "If you look at US and UK markets, disruption is already there. Google's Display & Video (DV) 360 got a good fight from e-commerce demand-side platforms (DSPs) like Amazon. Amazon has started picking lion's share in the US, UK, Canada, and Australia. The open web is the most critical piece right now which is supporting advertisers both in terms of transparent measurement and attribution. In the case of Google and Facebook, we have to rely on their data to see whether the convergence or attribution happened." Closer home in India, the move by big broadcasters like Star India, ZEEL, Sony Pictures, and Viacom18 to remove their GEC content from YouTube and put them exclusively on their own OTT platforms will also have an impact on Google's cash cow YouTube. The new short-form video platforms are also a threat of sorts for YouTube, which is a leader in digital video advertising. "If you look at YouTube, most of the broadcasters have pulled out their content from the platform as they are uploading content on their own platform. So user shifts will happen based on content moving to other OTT platforms," Khatri said. He also sees the duopoly facing tough competition from e-commerce players. "Going forward, we will see e-commerce playing a bigger role in advertising. Be it Paytm, Flipkart, Amazon or grocery platforms like Big Basket. They will start offering solutions to advertisers. E-commerce platforms will provide end-to-end full funnel campaigns. For example, advertisers can target relevant audiences outside the e-commerce platform and bring them back to the platform to do the final transaction. These platforms will be able to offer ROA (Return on Ad spends). The duopoly will get disrupted in the next two years but yes the duopoly is a sign of concern for open web as well as for advertisers who want more transparent conversion and attribution." "US tech companies have vertically integrated ad-tech which provides structural advantages. They control nearly all demand and supply infrastructure of the ecosystem, as well as all of the tracking and attribution on their platforms. This is their hidden moat that limits others from being able to compete," said the head of a digital media company on condition of anonymity. Kurate Digital Consulting senior partner Uday Sodhi feels that there is no point in whining about the rise of Google and Facebook. Rather, the Indian media companies should invest in their own ad-tech platforms which will help them build first-party data. This, in turn, will help them to understand their audience better and offer customised solutions to advertisers. "Next big trend beginning 2021 will be the investments in ad-tech by Indian media companies. They all have reached a stage where they can spend on ad-tech. There is a huge movement to create first-party data and customer data platforms by media companies. They have to do this to create a scalable ad business. It is very true for news companies as well. They have the traffic. In 2020, traffic for most news players has grown 3-5X. But the problem for them is that their ad revenues haven't scaled to that extent. That is primarily because they haven't invested in ad-tech, first-party data platforms, and good programmatic ad platforms," he averred. OTT platforms, he noted, have started spending on ad-tech, whether it is Disney+ Hotstar or ZEE5. However, some of the legacy players are still not investing in it. "First-party data is important since it will allow platforms to do targeted advertisements. Without investments in ad-tech, digital platforms will not be able to offer customised solutions to advertisers and therefore their revenue will suffer. Intermediaries will keep taking a large part of their businesses," Sodhi said. ZEEL Chief Growth Officer Ashish Sehgal feels that Google has its own set of challenges in maintaining its hegemony in the digital ad market. "In digital, the majority of ad dollars is going to Google and Facebook. A lot of the print media's classified business has been taken away by Google's search business. Even if you look at Google's search ad business, it is not growing so much following the emergence of Amazon and Flipkart. Other than knowledge and information related search, in which Google is a leader, a lot of search is happening on e-commerce. Knowledge and information related search doesn't generate enough revenue. Google earns revenue mostly from ads that show up when users are searching for a product or a service. Within digital, they will have competition there. English print will get impacted, however, local print will give Google a competition because not everyone is digital savvy and regional guys also offer cheap advertising," Sehgal expounded. According to Sehgal, the combo of TV + digital will help in growing the overall ad pie. The GDP to ad ratio in India will also see a surge. Television, he noted, has still some headroom for growth as TV penetration is still at 70%. "TV has a lot of room to grow because the satellite TV penetration is still at 70%. While digital will grow, TV will also grow. The impact of all this will be that the overall pie will grow. TV still has scope to grow for the next 10 years. We have a diverse population. All forms of media have their own audience. TV and digital will take GDP to ad ratio to 1.5-2% which is the worldwide phenomenon. Digital will not eat into anybody's pie in fact it will add to the pie. Companies will increase their ad budgets. They will also spend on performance marketing," he stated. Grapes Digital COO and Strategy Head Shradha Agarwal said that the Google-Facebook duopoly can affect the market in the long-run. "Today a smaller budget campaign of up to Rs 10 lakh don't look beyond social platforms, and a campaign size of Rs 10-30 lakh don't look beyond Google properties like search, YouTube and display as their media mix. Planners start looking at OTT players and other display platforms for a campaign bigger than Rs 30 lakh in majority of the cases. This one is reducing advertisement opportunity for various publishers today and impacting jobs in the country. Smaller players will eventually find it tough to compete with the tech giants and it will ultimately affect consumer welfare. Secondly, these companies can influence the policies of a nation because the data they collect gives them a clear edge over competitors and the government at large. Issues related to privacy and data security have been long debated but still, the companies monetise the data without informing the user," she elaborated. Elara Capital VP Karan Taurani said that there is no way out of this duopoly unless there is some regulation. Google and Facebook, he said, corner almost 70% of the digital ad pie. "Apart from Google and Facebook, the other big piece is OTT. Digital video advertising is almost Rs 5,000 crore, out of which 50% is YouTube and the remaining Rs 2,500 crore is shared among other OTT platforms like Disney+ Hotstar, ZEE5 and SonyLIV." Read more news about (internet advertising India, internet advertising, advertising India, digital advertising India, media advertising India)