The Google/Facebook digital advertising duopoly is tightening its grip.
Zenith’s survey of the top 30 global media owners has found the two tech giants accounted for 20% of global ad expenditure in 2016, up from 11% in 2012. They took 64% of "all growth" in media spend over the five-year period, according to Zenith.
Their hold over digital is greater. They are estimated to take upwards of 85% of digital ad growth – and close to 100% in some markets. Strong first-quarter results from Google suggest the trend will continue.
The implications for media plurality are serious because advertising has funded the growth of the free internet. So other media owners need to find revenue from elsewhere. Comcast, Disney and 21st Century Fox, the three biggest traditional media owners in Zenith’s survey behind Google and Facebook, all generate significant revenues from pay-TV and other areas outside advertising.
Regulators might intervene to challenge the tech giants one day. But no-one should count on it in a rapidly evolving, global marketplace, where national regulators wield relatively little power.
It makes business sense for smaller media owners to reduce dependence on ads. The Guardian shouldn’t have to move to Manchester just to make ends meet.
The challenge for media agencies is as profound for media owners.
Now that advertisers can take some of their media in-house and go directly to Google and Facebook to buy ads on a self-serve basis, the monetisable pie for agencies is shrinking.
WPP has close to 30% share in traditional media in most markets but only about 6% of Google’s ad revenues, although Sir Martin Sorrell sees no "evidence" that advertisers are bypassing agencies. He points out a chunk of Google’s revenues come from "the long tail" of small businesses that aren’t likely to use agencies.
The big agency groups have proved inventive at adapting to changing conditions over the years. But everyone, including advertisers, looks small compared to Google and Facebook with their vast wealth, trove of secret data and tech know-how.
Google and Facebook aren’t just the world’s biggest media owners. They are now two of the world’s five largest companies, although they are reluctant to admit they are media companies.
What a paradox. Media as a sector has never been so valuable. Yet those riches are falling into the hands of fewer, bigger companies than ever before. All the more reason to scrutinise them.