Google and Facebook Inc. FB 0.67% have dominated the U.S. digital advertising market for years, earning them the title of “the digital duopoly” and leaving competitors scrambling for crumbs. But now there are signs that platforms like Amazon and Snapchat are chipping away at their market share.
In its latest forecast, research company eMarketer predicts the combined U.S. digital ad market share of Alphabet Inc.’s GOOGL -1.41% Google and Facebook will fall for the first time this year, shrinking to 56.8% from 58.5% last year. At the same time, overall digital ad spending in the country is likely to grow nearly 19% to $107 billion in 2018.
To be sure, Google and Facebook are still increasing their total ad revenue significantly, and no other competitor even cracks 5% market share. But those smaller rivals are growing more quickly than expected and are seeking a larger share of the pie.
Google’s U.S. revenue from digital advertising is expected to increase about 15% this year to $39.92 billion, while Facebook’s would jump 17% to $21 billion, according to eMarketer’s forecast.
That would give Google command of 37.2% of the market, down from 38.6%. Facebook’s market share will likely be 19.6%, down from 19.9%, the first time eMarketer has projected such a decline for the social-media company. Google’s market share contracted for the first time in 2016.
Google and Facebook declined to comment.
Advertisers’ relationships with Google and Facebook have grown tense in recent years amid controversies over ads appearing next to inappropriate content, measurement discrepancies, and questions over the tech companies’ roles in Russia’s efforts to spread misinformation to influence the 2016 U.S. presidential election.
EMarketer’s estimate for Google and Facebook’s combined share of the market in 2017 was revised down to 58.5% from a forecast in September of about 63%, because the overall market grew more than projected to $90.4 billion last year.
In the same September forecast, eMarketer predicted that both companies would achieve a slight uptick in total market share in 2018. But the firm has since adjusted its estimates to account for other digital companies experiencing “faster-than-expected growth,” according to the report.
While it is a relatively small player in the digital ad industry so far, Amazon.com Inc. AMZN -0.67% is among the companies emerging as a potential rival to the duopoly. The retail giant is projected to bring in $2.89 billion in U.S. digital advertising this year, a 64% increase over 2017.
Amazon, the fifth-largest digital ad player on eMarketer’s list, is likely to capture 2.7% of the U.S. market this year. But by 2020, the firm expects Amazon to jump to third place, surpassing Verizon Communication Inc.’s Oath and Microsoft Corp. , with $6.4 billion in digital ad sales in the U.S.
“So far, it’s been conservative in its ad load. It remains an open question as to when Amazon will take advantage of its significant reach and dominance in shopper data to ramp up the placement of ads in other areas,” said eMarketer senior forecasting director Monica Peart in the report.
Amazon didn’t immediately respond to requests for comment.
Snap Inc., though still a small competitor, is forecast to grow its U.S. digital ad revenue by 82% to more than $1 billion in 2018 while increasing its share to 1%, according to eMarketer.
Instagram, the photo-sharing app owned by Facebook, is becoming an advertising powerhouse in its own right. Breaking out the estimates for just Instagram, the app is expected surpass 5% market share with $5.48 billion in U.S. digital ad revenue, eMarketer said.
“Facebook’s user growth in the U.S. has slowed down and is now about the same as that of internet users, while News Feed ad prices may be reaching their limit,” Ms. Peart said. “Meanwhile, Instagram, with its rapidly increasing advertiser base, will quickly become the engine that drives growth for the whole.”
Twitter faces more obstacles. The social-media company’s digital ad revenue in the U.S. is expected to decrease 4.9% to $1.12 billion in 2018. The company’s market share would ease to 1%. However, eMarketer expects Twitter to return to positive growth in 2019, with an expected 5.5% increase in revenue.
Write to Alexandra Bruell at alexandra.bruell@wsj.com