The big ‘tech-tonic’ shift: As Amazon begins to break the advertising duopoly – what’s left for anyone else?
Google and Facebook have held a well-documented, vice-like grasp over digital advertising budgets for over a decade, commanding 56% of global digital ad spend in 2018. That’s a fairly lucrative share of a market worth £470 billion. Viewing these figures, it is easy to regard the incumbent digital duopoly as unassailable; concluding their influence is too wide and their foundations are too strong.
But rumbling away behind these astronomical numbers is a very real threat to the current digital status quo. Sitting on mounds of valuable data, Amazon has long been murmured as a contender with the power to disrupt the dominance of Google and Facebook. These murmurs have escalated up the richter scale to tremors following the latest report from eMarketer.
In the race for quantifiable ROI advertisers have been misdirected to chase short term wins through millionth percentile click-throughs – an area Google and Facebook both specialise in
The report details how, for the first time, the combined market share of the digital duopoly shrank in the US. Amazon’s fledgling ad business has muscled in to take 8.8% of the US digital ad market, becoming the third largest player.
It’s clear to see why this Amazon-led disruption is happening. Amazon holds hugely valuable data that shows not only what a customer is purchasing, but what they are watching, reading, ordering, eating and drinking. Amazon has become so integral in the lives of many consumers that many see the data that Amazon holds as beneficial as they are able to offer a tailored experience.
The reverberations of Amazon crashing into Facebook and Google’s market share will be felt around the globe, and the resulting tech-tonic shift will shake the foundations of our industry. But the question remains: is this good news? Is there still an opportunity for other independent businesses in this ecosystem? Or are the big boys too big?
A fundamental issue with the dominance of the duopoly for most ad-tech businesses and publishers is that Google and Facebook are more than just competitors, they are often also indispensable parts of their own business. Most are so connected to Google through their tech (Google Ad Manager (SSP), Google Ads, Google Marketing Platform among others) that they only serve to fuel their data. It’s become a relationship of reliance, where publishers are willingly handing over their valuable data to Google to enable them to offer a better advertising experience to their users.
Consequently, for many businesses in the digital advertising ecosystem, the transition from a duopoly formed of Google and Facebook to an oligopoly formed of Google, Facebook and Amazon may feel like swapping one broken arm for a pair of broken arms.
But in many ways, the greatest strength of independent adtech businesses is in fact being able to bend our arms in ways that the big tech players simply cannot.
What I mean by this is that although Amazon’s entry may seem ominous, it actually changes very little for independent businesses. It’s easy to be in awe of the resources the big tech players have, but it’s more important to realise where they cannot compete. There is still lucrative opportunity in the face of this dominance: but you must be boutique.
Digital advertising isn’t the only industry to have a dominant oligopoly, and its illuminating to look at other how independent businesses have adapted to achieve growth in other markets. For example, the hotel industry has long been commanded by four or five major groups such as Best Western, Hilton and Whitbread. For independent businesses, it is very difficult (and often not rewarding) to compete with these major chains for price or accessibility, so the key is to offer a high quality, boutique experience.
This is the same strategy that ad-tech businesses must take - there is still a lucrative share of the market for independent businesses that can offer a unique, high quality product or service.
So while that boutique offering may take the form of a quaint bungalow or some kind of treehouse in the hotel and travel industry, what does it look like for digital advertising businesses?
There are two key elements to a boutique offering: delivering high-impact creativity and working with premium publishers. High-impact creativity means using ad formats that naturally provide the best canvas for ideas to shine - Google and Facebook offer many things but they cannot offer truly original creative as their creative solutions are a simple selection of standardised templates - whilst working with trusted publishers means that relevance and brand safety is ensured.
The strength of independent adtech businesses is being able to work in ways that the big tech players simply cannot
But who would choose an independent over Facebook or Google? What type of client does a boutique offering suit? I think the IAB touched neatly upon this with its #ClickHeads campaign last month. In the race for clearly quantifiable ROI, advertisers have been misdirected to chase short term wins through millionth percentile click-throughs. This is the type of offering that Google and Facebook specialise in.
With a boutique digital ad offering, advertisers would instead place a focus on longer term - but equally valuable - brand building. This means leveraging impactful advertising that prioritises driving metrics such as viewability over anything else. Combining eye-catching creative with the trusted reputation of a premium publisher is a good recipe for effectively increasing consumer perceptions of a brand.
As a new era of a digital advertising oligopoly dawns, it can be easy to despair and wonder what’s left for anyone else. But there is space to succeed. To survive the big tech-tonic shift businesses should focus on developing a customised, boutique offer that big tech are too big to offer themselves. In this space, there is still room for independent digital ad businesses to thrive.
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