When it comes to Internet advertising in Canada, it would appear that two of Silicon Valley’s biggest names control most of the table, leaving Canadian companies to fight over the scraps.

That’s according to the latest annual report by the Carleton University-led Canadian Media Concentration Research Project (CMCRP), which found that Google Inc. and Facebook Inc. collectively represented 66.5 per cent – a shade under two thirds – of Canada’s online advertising revenue in 2015.

In fact, Facebook alone earns more than two and a half times the entire newspaper industry’s online and mobile advertising revenue – $757.5 million versus $282.5 million – the report’s authors wrote, citing numbers from Newspaper Canada.

top-10-online-advertisers-in-canada
Internet advertising revenue (in millions) in 2014 and 2015 (Source – Canadian Media Concentration Research Project)

Google, which receives 50 per cent of Canada’s online advertising revenue, can thank its dominance of the search engine market, which the authors said is among the most concentrated segments in the media industry. As of 2014 – “unfortunately, the last year for which quality data is available,” they noted – more than three-quarters of Internet searches were entered into Google, with competitors Microsoft Corp., Yahoo Inc., and Ask.com trailing far behind.

Canadian search engine market shares between 2004 and 2014
Canadian search engine market shares between 2004 and 2014 (“CR4” refers to “Concentration Ratios”; Source – Experian Marketing Services, by way of the Canadian Media Concentration Research Project)

The report’s authors noted that Internet advertising has already become more concentrated over time, and is likely to become more so:

“In 2009, the top ten internet companies took 77 per cent of all internet and mobile advertising revenue,” they wrote. “By 2015, that number had risen to 86 per cent.”

Of course, Canadian Internet advertising revenues have soared too – from $141 million in 2000 to $4.6 billion in 2015.

“The Internet surpassed television as the largest advertising sector in 2013, and the gap between the two has continued to grow since,” the authors wrote, to the point where online advertising accounted for 37 per cent of advertising revenue across all media last year.

Google Canada’s Aaron Brindle was quick to point out that under Google’s revenue share model, the company only makes money from display advertising when a publisher makes money.

“Google’s platforms display advertising and operate on a revenue share basis where the majority goes to the publisher every time,” he told ITBusiness.ca. “This is a pretty unique approach in the marketplace.”

Globally, Brindle said, Google shared more than $10.2 billion USD with publisher partners in 2015 – or around 70 per cent of display revenue.

“We are working with publishers as they navigate the challenges of re-inventing their business models to address the opportunities of the Internet age,” he said.

Meanwhile, the CMCRP report’s authors admitted that some of their data had been less-than-optimally collected – citing, for example, what they called the “double-counting” taking place when traditional media companies report online advertising revenue under both their conventional areas of operation (television, daily newspaper, etc.) and “internet advertising” – though overall they said the data paints a “reasonable picture.”

“Contrary to popular belief, core elements of the internet – e.g. internet advertising, search engines, social network sites, smartphone operating systems, desktop operating systems, and browsers – are not antidotes to ownership concentration but some of the most concentrated media of all,” they wrote.

Note: Updated on Nov. 23 to incorporate comments from Google.

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