Could we be witnessing the decline of the Facebook-Google duopoly in advertising?
We’ve seen glimmers of it, as publishers like Meredith position themselves for first-party ad revenue potential. Firefox took aim at it with their proposal for an ad-free internet experience, and other media brands are shying away from third-party platforms to unlock the paid content potential of their user data.
“If history teaches us anything about monopolies, duopolies or any other defined industry hierarchy, it’s this: Nothing lasts forever. Just ask AOL. Or Napster. Or MySpace,” Wise writes.
“For Facebook and Google, that means their place in the digital advertising marketplace, however dominant, is far from inevitable,” he continues. “This year, the two increased their market share to about 60 percent combined, buoyed by sizable revenue growth that shows no signs of slowing down, but their growing strength does not equal inevitable or perpetual dominance. In fact, even as the two companies increase their market share, a number of emerging trends are threatening to eat into—or potentially even eliminate—their advantage over the competition.”
As he sees it, these trends are:
- Amazon’s continued growth in the digital ad arena – “The e-commerce giant’s growth in digital advertising should be particularly alarming for other players due to the rate at which it has picked up in recent years, growing more than 50% in 2019 to occupy almost 9 percent of the market. That means Facebook and Google now have to fend off a competitor with virtually unlimited resources, a treasure trove of data, and potentially a new ISP that could create real advantages for Amazon in the advertising space,” he explains.
- The democratization of ad data – This is a biggie. Google and Facebook face increased pressure from several directions, Wise explains: big brands demanding more access to their data; customer data platforms that make it possible for any size brand to understand and leverage its own data for insights; and a publishing sector more willing to sell ad space using in-house solutions.
- Shifts in the regulatory landscape – Who can forget the image of Mark Zuckerberg’s empty chair when called to testify on data handling irregularities? As Wise explains, there are now formal antitrust probes into both Facebook and Google over their attempts to lock out competition.
- New competition – From TikTok to Netflix to Amazon Prime and now Disney Plus, our media consumption habits are becoming more fractured every day. “As they attract more eyeballs—and Facebook’s user time continues to decline—advertisers could look elsewhere for their digital platforms,” Wise explains.
- Lack of innovation – Smaller, more agile competition is able to innovate far more quickly than a behemoth. “Facebook and Google, meanwhile, have gone several years without driving real innovation. Both sit on enormous war chests, which can be used both as a resource to fund R&D and a justification to avoid breaking the mold. Their competitors, meanwhile, have every incentive to try new things in order to break through,” Wise writes.
It’s a fascinating article in how it breaks down some obvious and some obscure trends that could be signaling a ground shift in how brands advertise. From where we stand, it’s a very good trend indeed, as consumers exercise free choice and brands turn back to real engagement with their audience.