Meta and Alphabet lose their dominance in the US digital advertising market

Expand SOPA Images via Getty

Meta and Alphabet have lost their dominance in the digital advertising market they have ruled for years, as the duopoly is hit by growing competition from rivals Amazon, TikTok, Microsoft and Apple.

The share of U.S. ad revenue held by Facebook parent Meta and Google owner Alphabet is expected to drop 2.5 percentage points to 48.4% this year, the first time the two groups haven't held a majority share of the market since 2014, according to research group Insider Intelligence.

This will be the fifth consecutive annual decline for the duopoly, whose market share fell from a peak of 54.7% in 2017 and is expected to fall to 43.9% by 2024. In the worldwide, the share of Meta and Alphabet decreased by 1%. peak at 49.5% this year.

Jerry Dischler, head of ads at Google, told the Financial Times that the fierce rivalry from new entrants reflects an "extremely dynamic advertising market".

Regulators in the United States and Europe have added antitrust scrutiny, such as suing Google for allegedly promoting its products over competitors.

In December, Facebook owner Meta received a complaint from EU watchdogs over concerns that the social network's classifieds service was being unfair to rivals. Tech groups are fighting harder than ever for a share of the $300 billion digital advertising market, even as companies around the world slash advertising budgets in response to rising interest rates and high inflation .

Amazon and Apple have expanded their advertising teams. In July, Netflix announced that it would partner with Microsoft to create an ad-supported tier of its streaming service.

Meta chief executive Mark Zuckerberg blamed recent revenue declines on Apple's privacy changes that make it harder to track users and target advertising, as well as the app's growing popularity of viral TikTok videos, owned by Chinese parent company ByteDance.

"Four years ago, you weren't talking about [TikTok or Amazon] in advertising," Dischler said. "So it's very telling that more people are recognizing that advertising is a great scalable business model."

Enlarge FinancialTimes

Amazon's foray into the world of digital advertising has played a big role in Meta and Google's attainment of dominance. After playing for years in the market, it stepped up its efforts in 2015 and has since seen its ad revenue skyrocket from less than $1 billion to around $38 billion this year.

"Before I joined Amazon Ads, I didn't even know what Amazon Ads was," said an Amazon executive who explains that they now run "a massive team, and I didn't know it existed before. that the recruiter calls".

Paul Prior, chief operating officer of Undertone, a digital advertising company, said retail giants led by Amazon realized their detailed customer data could be the foundation of massive advertising activity with higher margins than selling goods online.

But Amazon then went a step further by expanding its on-site advertising business beyond its own shopping site. “Across the broader digital universe, they use this dataset to enable brands and advertisers to buy better, spend more efficiently, and drive return on ad spend,” Prior said.

Apple has also emerged as a new threat. Its ad revenue has grown from less than $2.2 billion in 2018 to more than $7 billion this year. While that's only 1.2% of the global market, it's already more than Snapchat and Pinterest combined, and some estimates suggest Apple could hit $30 billion in ad revenue by 2026.

In September, the FT revealed that the iPhone maker plans to nearly double the headcount of its growing digital advertising business. His job postings describe ambitions to "redefine advertising" for...