Google and Facebook now make up less than half of the internet’s advertising dollars

Money flows from one hand to the other

photo: MIA studio (Shutterstock)

Science fiction author Stephen R. Donaldson said, “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 but the Google and Meta ad business. My goodness, how times change.

Google and Meta control less than 50% of digital advertising spend for the first time since 2014, a trend that is reported to be accelerating in the coming years axios. Citing Insider Intelligence predictions, Axios reports that Google and Meta are expected to bring in 48.4% of online advertising revenue this year — 28.8% for Google, 19.6% for Facebook’s parent company — a number that has been steadily declining since the tech giants peaked in 2017. when they took 54.7% (Google with 34.7%, Meta with 20.0%).

“Google and Meta are facing a number of challenges for their advertising business, including a more privacy-focused market, economic turmoil, a rebalancing of expectations following the pandemic-related spending boom, and general uncertainty in the technology and media sectors,” said Paul Verna, a senior Analyst at Insider Intelligence.

Fans of market competition have long resented (and with good reason) the Google and Meta duopoly in 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 stakes in companies like Amazon and TikTok, although we don’t see any existential threat to either right now,” Verna said.

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

There are many reasons for switching, but my two favorites start with the letter “A”. You may have heard of them: Amazon and Apple. When you hear these names, unless you work in marketing, “ads” is probably not the first word that springs to mind.

Amazon and Apple are probably the most significant disruptors in the corporate advertising industry over the past decade. Thanks to their efforts, digital advertising is undergoing a sea change.

The most interesting is the Apple effect. Last year your iPhone started asking if you wanted to be tracked by your apps. It probably didn’t seem like much to most people, but it made a young entrepreneur named Mark Zuckerberg very, very angry. This setting, called App Tracking Transparency, cut the flow of iPhone user data to Facebook and Instagram. This could be called “big thing.” Tracking you across other companies’ apps and websites is an important part of Meta’s advertising infrastructure. Ultimately, Meta said it lost $10 billion as a result this attitude alone.

One of the great things App Tracking Transparency did was open the doors to competition. Meta’s ad business was destabilized, and suddenly third-party data was much harder to get hold of. This made large consumer-facing companies with tons of data about their own customers think about starting their own advertising business. A lot of Out of them retailers like 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. Also Marriott came into play.

To quote advertising industry analyst Eric Seufert: “everything is an advertising network.”

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

“All of these trends add up to seismic shifts for Google and Meta — two companies that, until recently, have been trusted to exceed Wall Street’s high expectations and, in some cases, their own forecasts,” Verna said.

To get used to something. Insider projects that Amazon will take 12.7% of dollars in digital advertising by 2024, compared to a projected 17.9% for Meta.

writes Seufert in his blog Mobile developer storeo That 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 unchallenged online dominance has come to an end:

Given the staggering growth of Amazon, TikTok, and various retail media networks — including those launched this year, like Netflix — it’s reasonable to characterize the digital advertising market in 2022 as significantly more competitive than either 2016 or 2017. The Duopoly -Representation is poor as Google and Meta see a common minority share.

48.4% of the nearly $250 billion digital ad business isn’t exactly small change. But in 2023 and beyond, the internet and tech landscape will look very different. Advertising money goes to other companies.

READ :  Herschel Walker's 'prop' badge is the internet's new favourite meme