Advertising Powers Google’s Future
In recent weeks, we have seen a flurry of earnings announcements from the major digital advertising platforms, including the big three: Amazon, Facebook, and Google. Together these companies account for 62 percent of all digital ad spend, according to eMarketer.
Google dominates with 37.1 percent market share. And yet, during earnings season, Amazon and Facebook have dominated the news even though Google’s ad business grew by 20 percent (year over year) for the final quarter of 2018. Google’s advertising revenues for the quarter were $32.6 billion, accounting for 83 percent of Alphabet’s revenue. For the full year, Google achieved $116.3 billion in ad revenue compared to $10 billion achieved by Amazon Advertising.
Where’s the Love for Google?
So where’s the love for Google? Here’s what I think is happening:
- There’s a new kid in town. Amazon’s ad business is smaller than Google’s by a wide margin. But the story of Amazon is sexier. Amazon has grown its ad business rapidly. And Amazon is perceived as a threat to Google. More product searches occur on Amazon than on Google, and Amazon is luring advertisers away from both Facebook and Google. Amazon enjoys the cachet of an industry disruptor.
- Surprise is more interesting than predictability. Facebook surprised analysts by reporting strong advertising growth for 2018, as we noted on our blog. Here is a company that has been rocked by data privacy scandals for months. And yet, the world’s largest social media platform just keeps growing, which raises questions about how important data privacy really is to Facebook’s community. As for Google? Advertising growth is expected. Even when Google surpasses analysts’ estimations, the pundits say “Yes, but . . . “ With Google’s latest quarterly earnings, analysts noted that Alphabet is spending more to support its ad business.
But make no mistake: Google is going to continue to grow its ad business and in doing so will draw upon several advantages, such as:
- A massive user base that relies on Google across multiple platforms and apps ranging from the Google search engine to Google Maps and YouTube.
- A head start in using artificial intelligence to make advertising smarter and more effective. True, Google faces competition from Amazon and Facebook. But as I’ve noted, Google’s extensive AI tools are rapidly evolving.
- Global reach. Amazon and Facebook are improving their advertising products to support international ad campaigns, but Google commands an already established global presence.
- Strong content marketing that educates advertises on Google’s products. You can see for yourself from Google’s blogs.
What Businesses Should Do
My advice to businesses:
- Stay abreast of advances in Google’s ad tools, especially with AI.
- Understand how Google’s many platforms are evolving. For instance, Google is introducing augmented reality to Google Maps. What do these advances mean to your ability to build a presence across Google’s universe? How will you adapt?
To maximize the value of your digital ad spend, contact True Interactive. We’re here to help.