Facebook's CTO made one tiny remark that's sure to fire up the advertising industry
- Facebook CTO Mike Schroepfer defended possible regulation rumors by calling its ad business "very small."
- But marketers' concerns over the duopoly of Facebook and Google's control over the advertising industry is nothing new and continues to grow.
- In fact, Facebook is the No. 2 largest media owner on the planet, according to ad agency Zenith Media.
During a panel at Recode's Code Conference yesterday, Facebook's chief technology officer Mike Schroepfer made a comment that likely stumped a few marketing and advertising execs in the room.
When asked if Facebook should be regulated over concerns that the company has a monopoly on internet services, Schroepfer said, "Consumers are smart-they use the products that they want. We're a very small part of the overall ads business so I think we're honest when we say we feel competition all the time."
For anyone that's been following the advertising business for the past few years, Schroepfer's comment seems outside the reality that is the duopoly of Facebook and Google, which continues to dominate the digital media industry.
It's impossible to avoid Facebook
To be clear, yes, Schroepfer's comment is accurate. Facebook made $40.65 billion in revenue during 2017, according to the company's earnings. Research firm eMarketer estimates that advertisers spent $585 billion globally last year, meaning that Facebook contributed to roughly 7% of global ad budgets last year.
But talk to any agency, publisher or analyst and Facebook's large footprint on the ads business is impossible to ignore.
Meanwhile, the trend towards higher digital ad budgets continue to grow and Facebook's share of the ad world is only likely to grow in coming years while print and TV spends decrease.
Here's a chart from EMarketer's report that shows how much digital ad budgets are growing:
Facebook is bigger than Comcast, Verizon and Disney
In fact, ad agency Zenith Media says that desktop and mobile advertising overtook traditional TV to become the biggest medium last year, growing 14% year-over-year. By 2020, internet ad spending will represent 44.6% of global ad spend, eclipsing TV's expected 31.2% of ad spend.
Zenith also puts out a yearly report on the top 30 largest media companies. Facebook does not consider itself a media company, but the report's methodology considers Facebook to be one of seven "digital platforms that are funded by internet advertising."
Between 2012 and 2016, Facebook's revenues grew 528%, placing it at No. 2 on the list. Google's parent company Alphabet was No. 1 on the list.
Suffice to say, little about Facebook's ad business is actually little.
You can watch the full Recode interview with Facebook's Schroepfer and chief operating officer Sheryl Sandberg below: