The growing influence of the ‘digital duopoly’
According to eMarketer, Google and Facebook accounted for about 63% of the digital advertising market in the US; 49% in the world. MediaPost suggests their market share could be between 60% and 70% in the US using data from various sources. Scary numbers?
A GroupM presentation at the UBS Global Media and Communications Conference in New York stated Google and Facebook will end 2017 with 84% of digital media investments (excluding China). How about now?
Still not scary enough?
Enders Analysis estimates that Facebook and Google accounted for 89% of all growth last year. Not only they are growing fast, the rest of the industry is actually retracting. If you take out these two companies from the picture, the digital market witnessed a negative growth and the duo are rising at the cost of other players in the market.
Wherever you look, the point is clear that the two technology giants control the majority of the digital space and their control is only growing.
Why should this concern us?
Their growth threatens the existence of media agencies. Yes, that is a bold statement, and you might think that’s a good thing, considering all the transparency issues media agencies have been having in recent years (if you haven’t read already, Marc Pritchard summed it up well). Murky communication with their clients, no set standards on reporting and a complete loss of trust is forcing media agency clients take their services in-house.
Crucially, the vertical teams at Google and Facebook are capitalising on the damaged relationships between media agencies and their clients by approaching the big buyers themselves and completely skipping the middle man. I mean, why shouldn’t they? Increased profit margins and higher influence in client relationships sounds pretty good to me.
Also, if the media agency methods are so questionable, why should we care about the existence of the media agencies? Any economy professor could tell you that duopoly is bad for consumers (or clients in this case). With only a small number of companies to choose from, prices stay high and influence remains unchecked. Despite how murky media agencies approaches have been in the past they still, carry the voice of their clients and keep the big two in check.
Okay, I’m still not convinced that we should care about the two, you say.
As the power of the duo grows, we can expect even more measurement errors and brand safety scandals. They’ve repeatedly reported wrong numbers to advertisers and directly or indirectly affected the money that companies give to them. In other words, they’re marking their own homework and charging the teacher for the amazing grade they’re getting. As the great Ad Contrarian, Bob Hoffman, put together “They make shit up, imbeciles at agencies believe it, dimwit clients fund it, and – bingo – more ad money.” Surely, you’d think, as they grow they will be able to invest into better digital measurements and reporting but the reality is that they simply do not care enough about making them right, because no one is pressuring them to change.
Last September, an analysis by Guardian revealed that Facebook claims to reach more young people than exist in the UK, US and other countries. The error was not in the hundreds, but in the millions! And what was the response from the marketing community? Non-existent. Have a look what WPP boss, Sir Martin Sorrell, had to say. And if a company, marketer, government or a local drunkard decides to finally say something, Facebook and Google can point to their involvement in the many organisations (e.g. Coalition for Better Ads, The Interactive Advertising Bureau etc.) that speak a lot about transparency, yet do so little to tackle the buried transparency or privacy issues. It is safe to say as Google and Facebook continue to grow we can expect even more ‘careless’ errors.
Lastly, the GooBook (Google and Facebook) continue to grow their influence over news, yet sway away from any responsibility of being a publishing agent. More than two-thirds of American adults — 67% , to be exact — “get at least some of their news on social media,” according to data released last year by Pew Research Centre. Social platforms including Google, Facebook, Snapchat and Twitter monetise, host, distribute, produce and even in some cases commission material, but continue to deny being a publisher. As the revelations continue to unravel about Google or Facebook’s role in distributing fake news, political ads from Russian operatives or racist ads, it becomes clearer that they need to be recognised as publishers and adhere to the same accountability of spreading information. Yes, I will admit, I did welcome Zuckerberg’s recent New Year resolution of ‘fixing Facebook’ this year, yet it makes me think how many times we’ve heard this before and nothing happened?
As a strong competitor entering the space looks further away than ever, there is little chance that the duopoly will be broken any time soon. Thus we, the marketing community, need to acknowledge the growing power of the two and demand accountability for their increasing influence in news, digital metrics and advertising space.