Why the Demise of the Google/Meta Ad Duopoly Is Good News
Recently there’s been some considerable discussion about the demise of the so-called advertising duopoly. This refers to the speculation that Google’s and Meta’s dominance of the online advertising industry is fading as their share of online advertising shrinks. As reported widely, Google and Meta are expected to bring in less than half of all U.S. digital advertising in 2023 for the first time since 2014. Here’s what the number say:
- Google and Meta will together capture 48.4 percent of all U.S. digital ad revenue in 2023 — 28.8 percent for Google and 19.6 percent for Meta — down from 54.7 percent at their peak in 2017, when Google’s ad revenues account 34.7 of the market, and Meta accounted for 20.0 percent. per data from Insider Intelligence.
But let’s not shed any tears for Google and Meta. They are doing just fine. Google generated an astounding $282 billion in advertising in 2022. And Meta, following a difficult 2022, is rebounding strongly as the business shifts its advertising model from tracking third-party cookies to first-party customer data.
No, the duopoly isn’t fading, exactly. But the online ad world is getting more crowded. For instance:
Amazon Ads is nearly a $40 billion business.
- TikTok is expected to earn $8.6 billion in ad revenue in 2024 – assuming TikTok doesn’t get banned in the United States.
- A host of retailers ranging from Walmart to Walgreens have entered the online advertising, business. They’re using Amazon Ad’s blueprint: tap into the consumer behavior data they collect from their own customers (known as first-party data) to develop targeted ad products. Retail media at the global level is forecast by WARC to be the fastest-growing marketing channel this year, reaching $122 billion in revenue.
- Several companies outside of retail such as Airbnb and Uber are doing the same thing with their first-party data as retailers are: developing ad businesses. They’re smaller, but they are significant.
The growth of Walmart’s ad division, Walmart Connect, is an example of how varied the online advertising world has become. Recently Walmart said that Walmart Connect grew 41 percent year-over-year in the fourth quarter of 2022. Its ad operations were up 20 percent over the period and jumped nearly 30 percent in 2022, generating $2.7 billion for the full year.
Walmart enjoys a significant advantage: it operates a strong eCommerce business to complement its mammoth chain of retail stores. This gives the company a large audience online and offline to develop and deliver targeted ads. During the runup to Black Friday during the 2022 holiday season, Walmart even enjoyed stronger search traffic than Amazon did.
Walmart has developed several ad units. They include:
- Search to make products found on Walmart’s digital sites such as Walmart.com.
- Display on Walmart’s site and across the web.
- In-store to make a brand visible on digital ads in Walmart stores, such as in self-checkout lanes, or as a “commercial” on in-store TVs adding to the number of replacements for linear TV.
A number of businesses, such as Kraft Heinz, report improvements in sales lift by working with Walmart on ad campaigns across Walmart properties.
The rise of alternatives to Google and Meta is good news for businesses for a few reasons:
- More competition gives advertiser more choice. The rise of retail networks is a good example. Businesses can tap into more refined first-party data from each retailer to target different audiences. For instance, the Macy’s media network gives advertisers entrée to a more style conscious consumer.
- More competition means that Google and Meta need to improve their own ad products. For instance, the popularity of TikTok has forced Meta to develop short-form video content, Reels, with ad products to go with them.
We suggest advertisers capitalize on the proliferation of ad platforms wisely. Focus on the platforms that provide the strongest ROI while experimenting with emerging platforms that are aligned with an audience you have been wanting to reach (e.g., TikTok for Gen Z) and channels that are untapped to you.