"Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Jay Friedman, president and partner at Goodway Group.
As an industry, we’ve spent the last several years talking about the duopoly, specifically how Google and Facebook receive and control around 60% of all advertising spend. But, after all the discussions, consternation and startups that created new and interesting tech to take on these two companies, it looks like the tipping point will result from something entirely different.
It’s July 2020, and I think this article will age well as we look back at this month and year as a major turning point in digital marketing.
Current duopoly landscape
Facebook may have finally struck a chord that will reverberate negatively. The fastest way to win brand favor and loyalty is to appeal to someone at their emotional core. Many have long criticized Facebook for abusing its power and shirking responsibility for the content on its platform. As a result, when Facebook was viewed to be permitting, tolerating and even enabling hate speech, brands faced a very easy decision: Stand by their customers.
The situation is very different for Google. There are no misdeeds, “there are misunderstandings” – at least that’s the line it gives to marketers and publishers. That may have also been its line to the DOJ and state attorneys general, but apparently they didn’t bite.
Will Google learn from Bill Gates, who attributes his biggest mistake – losing the mobile platform war to Google and Android – to lack of focus from the DOJ’s antitrust case?
Regardless, the cases being brought against Google mean there will be changes that provide opportunities to others outside the duopoly. When 80% of a multi-hundred-billion-dollar industry is controlled by just a few players, changes to that dynamic will have profound effects. I see four sets of winners.
Many publishers have told me, “It’s not that Google’s publisher ad server is the best product, it’s that it’s inextricably linked with its exchange’s demand, and I can’t afford to lose that.”
Amazon is quietly building an ad tech powerhouse, and it has focused squarely on being the alternative that can bring demand to publishers. This puts Amazon at a central leverage point in the ecosystem. Through its publisher-fee-free wrapper, Amazon appears not just generous, but benevolent! Wait. Is that déjà vu?
Combine this with point-of-sale data that can be deterministically linked back to ad impressions and a global media empire worth up to $500 billion in which ads can be placed, and Amazon is a force to be reckoned with. If and when dollars flow away from Google and Facebook, I expect Amazon to be the first beneficiary.
2. Independent ad tech
Led by The Trade Desk, but certainly comprised of a broader and very prolific group of companies, indie ad tech will finally get its shot. Google revealing its exchange take rate of 20% should inspire independent SSPs to leverage Prebid and negotiate volume deals with the world’s largest agencies and marketers. Wiring together an ID vendor, a DSP, multiple SSPs, verification vendors and more – even if it means better results – is still more effort than most buyers, agencies and brands want, or are contracted to take on. But, if the industry’s two biggest “easy buttons” are compromised in any way, indie ad tech should come out a winner.
3. TikTok, Twitter, NextDoor, Pinterest and more
When a brand pulls spend from Facebook, those dollars ideally are reallocated to the next most efficient place to find and address that audience. That’s not easy. It requires effort and significant coordination in large agencies or in-house marketers, and the easiest way to convert money pulled out of Facebook – and the fastest to get a nod by the client – is to find another social platform with similar targeting options. Marketers: Be extra careful about this default bias during this time.
4. Google and Facebook
Yep. When they lose, they win.
Advertisers may pull out of Facebook more permanently, but the Instagram ad unit is still one of the best out there. It will take a strong commitment to social activism for brands to pull out of all of Facebook’s properties, and I predict Instagram will see a larger-than-expected share of the diverted Facebook money long term.
With Google, it’s the stuff of analyst call dreams. Any spinoff or sale that results in the federal and state governments agreeing to drop all charges and investigations removes a cloud over Google’s stock price for good. I believe that the more extreme the action (er, sacrifice) by Google, the bigger the long-term win. For example, if Google were to spin off its entire display and video ads business, Alphabet’s stock would absolutely soar and be a long-term darling of investors across the globe.
In the end, a healthy and fairly competitive Google and Facebook are good for brands and the digital marketing ecosystem. It looks like we’re closer to that reality, along with a host of other healthy and fair competitors as well.