Digital advertising spending declined 1% in November, according to data from Standard Media Index (SMI). This is thought to be the first time that overall spending has fallen in the digital publishing era. The good news is that smaller digital publishers, and even traditional media, could benefit from a weaker concentration of advertising spending with the major platforms.
Takeaways
- Amidst ad market forecasts that predict a slowdown, the Duopoly – Google and Meta – are expected to account for less than 50% of US digital advertising spending in 2022. This will be the first time they have not held more than half of the market since 2014.
- Down from a combined high of almost 55% in 2017, the two advertising giants together will account for 48.4% of US digital ad revenue in 2022:
- Google – 28.8%
- Meta – 19.6%
- Amazon has stolen some of that market share, but according to data released in media intelligence firm Magna’s year-end outlook, the share of the global market held by the top 15 media suppliers’ dropped by 2% this year, down to 58%.
Diversified spending
In the MediaPost article reporting on Magna’s findings, Joe Mandese looked for a potential positive for smaller digital publishers and traditional media outlets.
- For him, one of the takeaways was that the weaking focus on advertising spending with dominant digital platforms could see budgets switching. He wrote:
I’d like you to think about the implications behind Magna’s view that – after years of concentrating among Google, Meta, etc. – the advertising marketplace appears to be diversifying once again.
- Mandese acknowledged that the 2% drop in the market share of the top 15 biggest advertising vendors might not seem like a lot, but he pointed out that the total market is worth ‘hundreds of billions of dollars’.
Magna’s Luke Stillman believes the numbers represent ‘good news’ for small publishers. He said:
The concentration of the ad market paused for the first time in 2022.
Where will the money go?
Magna did not say specifically where the shifting market share will land, but Mandese spotlights two positive commitments made by big advertisers and agencies over the last couple of years.
- The creation of what have been described as “equity marketplaces” that are designed to re-target advertising budgets at publishers that serve minority audiences – Black, Hispanic, Asian and LGBTQ+.
- There have also been pledges to move money away from the most toxic social media platforms. This would see budgets removed from sites that promote misinformation and disinformation and put it back into quality journalism.
- Stillman said much of the advertising slowdown for big digital has come from a ‘precipitous deceleration’ of ad spending on larger social media networks brought on by increased competition – TikTok is expected to earn $8.6 billion in ad revenue in 2024.
- He also spoke of the negative impact of ‘data headwinds’ and the Duopoly’s established dominance has made them the target of multiple antitrust investigations and lawsuits. Sarah Fischer at Axios said:
While they still tower over digital rivals, their momentum is starting to slow as competition moves in.
One note of concern has been sounded over the idea that budgets will actually shift. Commenting on the analysis, Ed Papazian highlighted a worry that, with ad spending patterns differing across various media types, there is no real confirmation that advertisers are reallocating funds, particularly on social media.
