debtor Over the past decade, there have been two more or less universally accepted truths about digital advertising. First, the fast-growing industry was largely unaffected by the business cycle. Second, it was dominated by the duopoly of Google (search advertising) and Meta (social media). This is his one jealous rival to John Rockefeller’s oil rule in the 19th century.

Both of these truths are now being challenged simultaneously. With China’s economy slowing and the West in recession, businesses of all sizes are straining their marketing budgets. Until recently, that meant cutting back on non-digital advertising and keeping or even increasing online spending. That strategy has now come to a standstill as most ad spend has moved online. Last quarter, Meta reported its first year-over-year decline in revenue. Smaller rival Snap is laying off her fifth of its workforce.

For Alphabet, the parent company of Meta and Google, circular problems may not be the worst. They may have once hoped to offset slowing digital ad pie growth by grabbing a larger portion of the digital ad pie. more than this. Combined, the two companies are expected to bring in about $300 billion in revenue this year, while their four biggest rivals in the West have nearly a quarter of their sales. It may not sound like much, but it still gives incumbents reason to worry. Five years ago, most of these rivals were not in the advertising business at all (see chart). Moreover, as digital advertising enters a period of transformation, challengers appear well placed to increase profits.

TikTok is the loudest on the digital advertising scene. In the five years since its launch, the short-video app has taken advertising dollars away from his two biggest properties on Meta: Facebook and Instagram. So much so that these two social networks have reinvented themselves in the image of Chinese-owned rivals. Global revenue for TikTok will surpass $11 billion this year, doubling his figure by 2024, analyst firm eMarketer predicts.

The TikTok threat is well known. Notably, Meta boss Mark Zuckerberg mentioned the “unique” competitor five times in a recent earnings call. But Meta and Google may have to worry closer to home as his three tech companies in the US load their major businesses with more ads than ever before.

Chief among them is Amazon, which is expected to account for nearly 7% of global digital ad revenue this year, compared with less than 1% just six years ago. The company revealed that 2021 revenue will be his $31 billion.It wasn’t until February that he began reporting details of his advertising business. As technology analyst Benedict Evans points out, this is about the same as advertising sales for the entire global newspaper industry. Amazon executives now call advertising he one of the company’s three “engines”, along with his computing in the cloud and retail.

Microsoft is next, quietly expected to account for more than 2% of global sales this year, slightly ahead of TikTok. The company’s search engine, Bing, has a small share of the search market, but the market is huge. Microsoft’s social network, LinkedIn, is unglamorous, but its B2B ads can monetize the time users spend on it at about four times the rate Facebook does, estimates eMarketer’s Andrew Lipsman. At Snap he earns more than mid-sized networks like Snapchat and Twitter.

The most amazing new adman is Apple. iPhone makers were against intrusive digital advertising. We currently sell a lot of our own ads. With smartphone sales stagnating, the company is looking for new ways to monetize his 1.8 billion devices already in circulation, from smart phones to his smart earbuds. So far, it’s only dabbled in advertising and no sales figures have been reported. But Bloomberg recently reported that Apple’s advertising business already generates $4 billion in annual revenue, making it almost as big an advertising platform as Twitter. Apple executives believe there is still much work to be done.

they may be right. A change is coming to the digital advertising industry, which is suitable for big tech challengers. Apple itself is responsible for what could be the most important development. Its rules on “App Tracking Transparency” (attack) was introduced last year, making it very difficult for advertisers to follow users on the web and serve ads based on their interests.of EUThe Digital Services Act of , which was announced earlier this year, is moving in the same direction. America is considering its own similar legislation.

Tracking crackdowns have been particularly severe on platforms that offer display advertising that targets consumers based on their interests, as opposed to what consumers actively search for. Meta, which owns the social network, said in February: attack will lose $10 billion from its advertising business this year. We are trying to develop another way to predict consumer interest. Smaller platforms also rely on display advertising, but without Meta’s deep pockets, the task is more difficult. Or at least investors see it that way. Snap’s market value has plummeted by 83%, or $97 billion, in the last 12 months.

In contrast, Amazon, Apple, and Microsoft are isolated from their anti-tracking initiatives. They mostly rely on their own “first party” data. Amazon’s advertising is based on what people search for on its site. Type “socks” into the search bar and you’ll see promotions for that very sponsor him. Microsoft’s Bing is similarly unaffected. LinkedIn probably doesn’t, but Microsoft could theoretically use data from Bing to fine-tune the ads they see for LinkedIn users (at this point, we’re investigating, but that’s not the case). ). Apple’s app store advertising follows the same principles as Amazon’s. For example, when you search TikTok, you may see ads from rival apps like Pinterest. Apple is rumored to be preparing to introduce advertising into its Maps app to encourage local business. You can learn about your customers’ shopping habits through the transition to payment. No tracking is required as everything happens on Apple’s platform.

Another big shift in advertising is the shift of television viewing from broadcast and cable to Internet-connected. tv sets, can serve targeted advertisements. Amazon already shows ads next to sports on its streaming service Prime Video. Apple did the same with Apple tv set+, and may still launch an ad-supported subscription tier, as rivals Netflix and Disney+ will soon do. tv set But its acquisition of ad tech company Xandr earlier this year gave it a foothold to serve ads to other streamers. In July, Netflix selected his Microsoft to run its next advertising business, but he bid for the deal to Google’s disappointment and Microsoft’s own surprises.

Digital advertising is spreading to other markets where new challengers are well positioned. Audio is going digital, as is video, and listening has turned to streaming music and podcasting. This opens up opportunities for Amazon and Apple, which offer audio streaming services and make smart speakers. Both have voice-activated assistants Alexa and Siri, making promotions as easy as taking orders. Amazon sees Alexa as both a future saleswoman and servant.

Meanwhile, the pending acquisition of video game giant Activision Blizzard will make Microsoft a force in this fast-growing and increasingly ad-fueled industry. The company’s Xbox console already displays some ads on users’ on-screen “dashboards” and will reportedly soon offer more help for developers to sell in-game ads. increase. Activision’s unit includes King, makers of “Candy Crush.” Last year, King earned him $2.6 billion from advertising and in-game purchases by his 2.5 billion players.

Lipsman believes that “a new order will come into being” as digital advertising permeates every corner of the economy. He believes Amazon will overtake Meta in total ad revenue, perhaps within five years. Google is well-positioned to take advantage of the upcoming changes with healthy search advertising and the vast YouTube video and audio offering. Still, it will become more competitive in the future. The incumbent digital advertising duo may have hoped to expand their empire as more and more ads come online. Instead, it looks like a new rival is entering their business. .

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