Meta and Alphabet Lose The Advertising Throne
It seems that the long-held duopoly ruling the $300 billion advertising market is coming to an end as tech giants are fighting for their piece of the pie. Meta Platform Inc (NASDAQ: META) and Alphabet Inc (NASDAQ: GOOG) are losing their dominance to Amazon.com Inc (NASDAQ: AMZN), Microsoft Corporation (NASDAQ: MSFT) and Apple Inc (NASDAQ: AAPL).
According to Insider Intelligence, this will be the first year since 2014 that these two corporations won’t hold the majority share of the market as their share of revenues are expected to drop to 48.4 percent in what will be their fifth annual decline.
An extremely dynamic market
Jerry Dischler, head of ads at Google, spoke to the Financial Times about a fierce rivalry from new entrants, along with antitrust scrutiny owed to the U.S. and European regulators.
Google is being pursued for allegedly promoting its products over rivals while Meta is dealing with a complaint that its classified advert service being unfair to rivals.
Meta’s CEO Mark Zuckerberg is blaming Apple’s privacy changes for the drop as they make it harder to track users and target advertising. There’s also the fact that new comers are growing in popularity, with ByeDance-owned TikTok being the choice of today’s youth.
Rising costs and inflation are not stopping Big Tech
Unlike companies worldwide are cutting their advertising budgets in response to rising interest rates and high inflation, tech giants are going full speed ahead. They are even joining forces such as Microsoft and Netflix Inc (NASDAQ: NFLX) who announced back in July that they will build an advertisement-supported tier of its streaming service.
An updated business and advertising 101
Until recently, ad budgets were the first to be cut when recession fears enter the room. But with ad revenues sky rocketing, big tech has acknowledged the importance of advertising and its contribution to the business model as it allows significantly higher margins. Even Apple is redefining its advertising strategy and doubling its digital advertising business, with research group Evercore ISI expecting the iPhone maker forecasting a $30 billion ads business by 2026.
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