The miracle of more than half a decade has not been repeated: Google and Meta shake their dominant position in the billion-dollar ‘money machine’, bowing to a company … retail

Tram Ho

For more than half a decade, Alphabet and Meta together have dominated the digital advertising market – the billion-dollar “money machine” of the modern Internet. These two giants have sucked up almost all of online advertising money, year after year, to the point where competitors and regulators are concerned that there is no way to break their position as a ministry.

However, this year, Alphabet and Meta will face a number of challenges, along with efforts to improve revenue following a change in Apple’s privacy policy. Competition is also getting fiercer as a series of major competitors such as Amazon, Apple, Netflix, TikTok and Walmart begin to enter the market amid the economic downturn.

Kỳ tích hơn nửa thập kỷ không lặp lại: Google, Meta lung lay vị thế thống trị ‘cỗ máy kiếm tiền’ tỷ USD, cúi đầu chịu thua một công ty… bán lẻ - Ảnh 1.

We’re in a world where the players that once dominated the market are no longer growing as fast, ” said CJ Bangah, PR director of advertising at PricewaterhouseCoopers. “ Suppliers are just starting to enter the market and ‘gobble up’ the market share pie .”

According to Insider Intelligence, in 2022, the two platforms account for a combined 48.4% of digital ad spend in the US. The market share in the world’s largest economy has never been below 50% since 2014, but is expected to drop to 44.9% by 2023. It is reported that Meta recorded a decline in revenue in the first two quarters of the year. 2022, while Alphabet’s sales fell short of analyst expectations for three consecutive quarters – the longest negative event since 2015.

According to Bloomberg, both Alphabet and Meta built empires on user data, then used it to target and personalize ads. Meta expanded on Facebook by acquiring Instagram and WhatsApp, thereby creating an advertising platform that fueled the proliferation of hundreds of brands. Meanwhile, Alphabet’s Google search engine helps marketers reach users at the exact time they’re most likely to hit the “buy” button.

Kỳ tích hơn nửa thập kỷ không lặp lại: Google, Meta lung lay vị thế thống trị ‘cỗ máy kiếm tiền’ tỷ USD, cúi đầu chịu thua một công ty… bán lẻ - Ảnh 2.

The miracle of more than half a decade will not repeat: The powerful duo Google, Meta shakes their dominant position in the billion-dollar ‘money-making machine’, bows to a company … retail

However, changes to Apple’s privacy policy deal a huge blow to Google and Meta in 2021. Meta representatives once said that Apple’s change to the way advertising works on iOS apps will make manufacturers Apps and advertising developers have difficulty tracking user behavior, thereby putting Facebook at risk of losing up to $10 billion in revenue by 2022. This move also has a particularly negative impact on brands. Small brands, mostly advertisers, do not have a budget and are difficult to reach customers.

Most recently, Meta also faces a new threat in Europe after being fined 390 million euros by the data regulator for saying that its terms of service for targeted advertising are invalid. The fine was announced by the Irish Data Protection Commission, the body that regulates and applies the European General Data Protection Regulation (GDPR) in Ireland after two independent investigations from 2018 into the case. Meta. They said Meta asked users to allow the company to illegally use the data for personalized ads.

According to Bloomberg, advertising on e-commerce sites and online TV platforms is prevalent. GroupM, the advertising and media giant, expects e-commerce ad revenue to grow 10%, while online ad revenue to grow 18% in 2023.

According to GroupM, e-commerce advertising will account for 14% of the global advertising market, with sales expected to reach $121.9 billion this year, up from 7% five years ago. Part of the momentum comes from the fact that retail giants, notably Amazon, have captured the majority of the digital advertising market share in the US.

Our advertising is at the point where consumers are willing to spend ,” said Brian Olsavsky, Amazon’s CFO.

Kỳ tích hơn nửa thập kỷ không lặp lại: Google, Meta lung lay vị thế thống trị ‘cỗ máy kiếm tiền’ tỷ USD, cúi đầu chịu thua một công ty… bán lẻ - Ảnh 3.

Google and Meta will face a number of challenges, along with efforts to improve revenue following the change in Apple’s privacy policy.

According to Sam Bloom, CEO of digital advertising agency Camelot Strategy Marketing and Media, some of their clients have started using Amazon ads to promote products right on the platform. Many other retailers followed in Amazon’s footsteps, building digital advertising based on user data, thereby creating a retail media network. It is known that Walmart, eBay, Etsy and Instacart contributed about 1.4% of the budget to digital advertising in the US in 2022.

We expect retail to grow faster than digital in general. More companies are continuing to contribute to this growth, ” said Kate Scott-Dawkins, GroupM’s Chief Business Officer.

According to Kate Scott-Dawkins, the fastest growing sector of the market today is online television, which is expected to bring in $23 billion by 2023. Roku, Walt Disney’s Hulu; Paramount Global’s Pluto TV and Paramount+, Fox’s Tubi and Comcast’s Peacock accounted for about 3.6% of digital ad spend last year. The trend is expected to accelerate as the two biggest players in the streaming industry, Netflix and Disney+, roll out ad-supported versions.

Vincent Létang, executive vice president of global market research at Magna, a media investment firm owned by Interpublic, called the entry of Netflix and Disney into the market a “game-changing milestone” for ad-supported streaming service.

They bring in a huge potential audience and loads of quality video content ,” says Vincent Létang.

According to digital advertising consultant Ratko Vidakovic, all of these factors make the decline in Google and Meta market share almost unsurprising. According to Supergut CEO Marc Washington, the maker of gut health products used to spend about 80% of its advertising budget on the Facebook and Instagram platforms; The remaining 20% ​​goes to Google.

However, by early 2022, because Meta’s cost of attracting new customers unexpectedly doubled after Apple’s new policy, Supergut decided to move 50% of Meta budget to TikTok – an emerging platform attracting users young. Mr. Washington said Meta is still an effective advertising platform, but many studies show that “TikTok ads also produce similar results, even better than Meta”.

According to the WSJ, Google and Meta’s ad businesses are still growing, but at a significantly slower rate than the rest of the market. Internal analyst Zachary Goldner said that the market share erosion mainly comes from brands having the opportunity to access more ad formats.

All marketers want a lot of options ,” says Mr. Goldner.

By: Bloomberg, WSJ

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Source : Genk