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New Companies Challenge Alphabet Inc (GOOGL), Facebook Ad Duopoly

GOOGL – Can a true #3 ad giant emerge soon to challenge Google and Facebook’s ad dominance?.

Alphabet Inc (NASDAQ:GOOGL) and Facebook Inc (NASDAQ:FB) have long enjoyed an extremely dominant position atop the online advertising world, but more companies than ever are hoping that a legitimate third contender emerges.

The Wall Street Journal points out that a lot is riding on those hopes:

Google and Facebook together collect nearly half of global spending. Last year, the U.S. online ad market expanded by nearly $12 billion and the two firms accounted for over 77% of that spending growth, according to eMarketer.

Advertisers are hoping for the emergence of a legitimate third player to provide competition that can give them more leverage and help keep prices in check. For ad agencies, the matter is existential: Google and Facebook have the resources to deploy entire teams to work with marketers directly, cutting out the middleman.

As the two giants get even bigger, the tougher it becomes for a third party to rise to the occasion. And when a company does look like it has a shot to challenge Google and Facebook, they’re often acquired (see Facebook buying WhatsApp and Instagram).

The most likely firms to see major ad growth in coming years are Amazon, Snapchat, AT&T, and Verizon. Amazon has just begun to scratch the surface of ads on its platform, and Snap is still only a few months removed from its recent IPO. Meanwhile, AT&T and Verizon have enormous mobile customer bases, and can perhaps offer innovative ways for advertisers to connect with consumers.

Still, it will likely take several years for a true #3 to emerge — if it ever happens at all. That just means several more years of incredible profits and pricing power for Facebook and Google.

Alphabet Inc shares rose $8.89 (+0.93%) in premarket trading Monday. Year-to-date, GOOGL has gained 20.97%, versus a 9.02% rise in the benchmark S&P 500 index during the same period.

GOOGL currently has a POWR Rating of A (Strong Buy), and is ranked #1 of 46 stocks in the Internet category.

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GOOGL at a Glance

GOOGL Current POWR Rating™
Overall POWR Rating™
GOOGL Current Price $1,184.07 0.46%
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GOOGL Price Reaction

The day of this event (Jun. 19, 2017)
GOOGL Closing Price$975.22 1.73%
GOOGL Volume1,468,800
12.52% from avg
Leading up to this event
GOOGL 1-mo return0.42%
After this event
GOOGL 1-day return1.07%
GOOGL 3-day return1.84%
GOOGL 5-day return1.39%

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