Google, Facebook now take less than half of Internet advertising dollars

Money flowing from hand to hand

photo: MIA studio (Shutterstock)

Science fiction author Stephen R. Donaldson said that “everything dies, from the smallest blade of grass to the largest galaxy.” A few years ago, I might have told you that’s true, about everything except Google and Meta’s ad business. My, how times change.

Google and Meta control less than 50% of digital ad spending for the first time since 2014, a trend that is poised to accelerate in the coming years, they say. Axios. Citing predictions from Insider Intelligence, Axios reports that Google and Meta are expected to contribute 48.4% of online ad revenue this year (28.8% for Google, 19.6% for parent Facebook), a number which has fallen steadily since the peak of the tech giants in 2017. when they took 54.7% (Google with 34.7%, Meta with 20.0%).

“Google and Meta face a number of challenges for their ad businesses, including a more privacy-focused market, economic turmoil, a reset in expectations following the pandemic-induced spending boom, and general uncertainty in the tech and media sectors” , Paul said. Verna, Principal Analyst at Insider Intelligence.

Market competition fanatics have long worried (rightly so) about Google and Meta’s duopoly over digital advertising, the business that powers the entire Internet. The two advertising giants aren’t going away anytime soon, but make no mistake, we’re entering a new era in the online world.

“These are more sober days for these companies, but apart from losing some shares to Amazon and TikTok, although we currently do not see an existential threat to either,” Verna said.

Meta did not respond to a request for comment. Google declined to comment on its finances.

There are many reasons for the change, but my two favorites start with the letter “A.” You may have heard of them: Amazon and Apple. When you hear those names, “ads” probably aren’t the first word that pops into your head, unless you work in marketing.

Amazon and Apple are probably the biggest disruptors of the corporate advertising industry in the last ten years. Thanks to their efforts, digital advertising is undergoing a major change.

The Apple effect is the most interesting. Last year, your iPhone started asking if you wanted to allow your apps to track you. It probably didn’t seem like much to most people, but it made a young entrepreneur named Mark Zuckerberg very angry. That setting, called App Tracking Transparency, cut off the flow of data from iPhone users to Facebook and Instagram. That’s what you might call”great deal“. Tracking you on other companies’ apps and websites is a key part of Meta’s advertising infrastructure. Ultimately, Meta said it lost $10 billion because of it that scenario alone.

One of the big things App Tracking Transparency did was open the door to competition. Meta’s ad business was destabilized, and suddenly third-party data was much harder to come by. That made big consumer companies with tons of data about their own customers start thinking about launching their own ad businesses. A lot of them, especially retailers, such as 7-11, Best Buy, Chewy, CVS, DollarTree, Doordash, eBay, Home Depot, Instacart, Kroger, Lowe’s, Macy’s, Target, Walgreens, Walmart, Wayfair, Ulta, not to mention. other tech competitors like TikTok. Same Marriott entered the game.

To quote ad industry analyst Eric Seufert these days, “it’s all an ad network“.

But one company was already hard at work on the advertising project even before Apple’s privacy settings. Amazon’s advertising business is exploding. Today, Amazon makes more than $30 billion a year from ads, which is actually more money what Amazon does on Prime and all of its other subscription services combined.

“All of these trends represent seismic shifts for Google and Meta, two companies that, until recently, could be counted on to exceed Wall Street’s high expectations and, in some cases, their own guidance,” Verna said.

get used to it Insider predicts that Amazon will capture 12.7% of US digital advertising dollars by 2024, compared to Meta’s forecast of 17.9%.

Seufert writes on his blog Mem. of mobile developmentwhich Google and Meta are likely to hold the top two spots on the list of digital ad revenue generators for the foreseeable future. But the duopoly era of their undisputed online dominance has come to an end:

Given the staggering growth of Amazon, TikTok and several retail media networks, including those launched this year such as Netflix, it is reasonable to characterize the digital advertising market in 2022 as materially more competitive than in 2016 or 2017. Duopoly representation is dim and Google and Meta see a combined minority stake.

48.4% of the roughly $250 billion digital ad business isn’t exactly chump change. But in 2023 and beyond, the Internet and the technology landscape will look very different from advertising dollars to other companies.


Leave a Reply

Your email address will not be published. Required fields are marked *