Dec 20, 2022 - Technology

Slow fade for Google and Meta's ad dominance

U.S. digital ad spending share, by company type
Data: Insider Intelligence. Note: E-commerce includes Amazon, eBay, Walmart and Etsy; streaming includes TikTok, Hulu, Roku, Pluto, Tubi, Spotify, Pandora and iHeartMedia; tech includes Microsoft, Yelp and Verizon/Yahoo; social media includes Snap, Twitter, Pinterest and Reddit. Grey space indicates all other U.S. digital advertising. Chart: Axios Visuals

Google and Meta, known together in the ad industry as the "duopoly," are expected to bring in less than half of all U.S. digital advertising this year for the first time since 2014.

Why it matters: The duo's ad dominance has for years made both companies the target of antitrust investigations and lawsuits. While they still tower over digital rivals, their momentum is starting to slow as competition moves in.

By the numbers: Google and Meta will together capture 48.4% of all U.S. digital ad revenue this year (28.8% for Google and 19.6% for Meta), down from 54.7% at their peak in 2017 (34.7% for Google and 20.0% for Meta), per data from Insider Intelligence.

  • By far, the biggest threat to their collective ad dominance is Amazon, which has grown its ad business to over $30 billion dollars annually.
  • By 2024, Amazon is expected to capture 12.7% of all U.S. digital ad dollars, while Meta is expected to capture 17.9%.

While TikTok's ad business is booming, it's still relatively small in the U.S. compared to its Big Tech rivals.

  • TikTok is expected to earn $8.6 billion in ad revenue in 2024, which will make it the fifth-largest digital ad publisher in the U.S., following Google, Meta, Amazon and Microsoft/LinkedIn.

Be smart: The ubiquity of screens in the home, workplace and on-the-go has made it so that virtually any company can target customers with digital ads, expanding the set of competitors for Google and Meta from other publishers and social media firms to streamers, e-commerce companies and beyond.

  • Amazon, along with other e-commerce players like Walmart and eBay, has started to build out a significant digital ad network that can be used to boost products within its own marketplace.
  • Streaming companies like Hulu, Roku, Paramount's Pluto and Fox's Tubi are collectively gaining digital ad market share as more television dollars flow away from traditional television.
  • Because TikTok is an entertainment platform, Axios categorized it as part of the streaming category, alongside TV video companies and audio streamers, like Spotify and Pandora.

The big picture: Google has long dominated digital search advertising while Meta has conquered targeted social media advertising. But new entrants into the ad market are targeting their dominance in unexpected ways.

  • More people are leveraging TikTok and Amazon to search for products and ideas online, pulling some of the momentum away from Google's dominance.
  • Changes to Apple's app tracking policies have significantly undercut Meta's ability to target ads based on a user's activity across apps. Meta has said that it expects Apple's changes to cost it $10 billion this year.
  • Both companies are relying on the growth of digital video — YouTube for Google and Instagram for Meta — to stay competitive.

What to watch: Aggressive lobbying against Big Tech's ad dominance, mostly by the digital news industry and smaller technology rivals, will make it harder for Google and Meta to expand their ad businesses through acquisitions.

Go deeper: Everyone wants to sell your attention

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