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Google and Facebook recently announced quarterly income totalling £27 billion and their dominance is highlighted by the fact they account for 28% of the time Britons’ spend online and 36% of time in the US. Notably, in the US they account for a staggering 48% of mobile internet time.
Google properties alone – primarily search, YouTube and Gmail – account for 17% of UK and 22% of US internet time. Around 11% of UK and 14% of US time is accounted for by Facebook-owned properties, which include WhatsApp and Instagram.
The duopoly’s share of both internet time and ad revenue is staggering, particularly when you consider the internet’s near-infinite long tail. Back in the day, when people were using web browsers, other sites were ‘just one click away’ and there was more variety in terms of how people spend their time online. Today, as (1) people are more platform-driven (most mobile sessions start with either a search or social activity) and (2) mobile apps are the biggest driver of growth for online time spent, people stretch less outside of the familiar home screen apps – many of which belong to Google or Facebook.
This helps Google and Facebook gain even a higher share of all online time spent and ad revenue. When it comes to the latter, estimates say they account for 50-75%, but are hoovering up 80-99% of every new pound spent.
Why their revenue is double their share of time
Broadly speaking, the duopoly’s share of online ad revenue is double their share of online time. This is because both Google and Facebook have been highly innovative as well as making it much easier for advertisers to spend with them for a variety of reasons including:
- Volume = Because of their size, they can execute campaigns that quickly reach a large part of the total audience – providing the possibility to create and execute campaigns which have significant impact on the market and are significant enough for the marketers and their business goals.
- Adtech tools = Due to the R&D and maturity of their platforms, Facebook and Google provide best-in-class advertising products and tools, which just make it so much easier and quicker to plan and execute your campaign.
- Cross-device = Because of their size and growth, they can provide possibilities for campaigns that reach the right user, across a number of devices (due to most people consuming Facebook’s and Google’s services across a number of devices), always at the right context and place.
- Targeting = As these companies know so much about consumers (socio-economic background, what they’re interested in, where they went last week, what restaurants they like, who their friends are, etc), they can provide more meaningful and relevant ads.
- Analytics = Google and Facebook are data-rich, and extremely advanced when it comes to analysing data, optimising and even building self-learning algorithms. This leads to more effective campaigns and marketers can harness better feedback channels and metrics to gain ROI improvements.
- Seamless user experiences = Due to the investment into their apps and web services (and their user experience), and simply because of the time people spend across their services, they can embed ads in a more seamless way to the consumer journeys and user flows – making it nice for consumers and easier for the advertiser to place the ads on the right spot at the right time.
Their efforts to offer advertisers better effectiveness and the path of least resistance are in contrast with, say, the likes of the newspaper industry which rejected a joint ad sales venture to combat declining revenues.
What are the implications of these internet giants for you?
So what are the implications of this dominance for data-driven marketers looking to reach potential customers; how can the duopoly be harnessed or even sidestepped?
- The first one is fairly obvious, but any advertiser is missing a trick if they’re not utilising the excellent tools Facebook and Google have built to target campaigns more effectively, better measure the ROI and adapt future campaigns based on the insights provided.
- Second, one of their most attractive assets is their sheer potentially addressable reach – and marketers should be harnessing this, particularly in how easy Google and Facebook make it for you to run cross-device campaigns. But it’s not simply enough to run cross-device campaigns, you need to build media mix models in which you take into consideration not only the frequency count per device, but also the mix of other properties. Our research, for example, has shown that hitting the same user across YouTube, Facebook and Snapchat is more effective than hitting the same user a number of times on YouTube only.
- Third, one should also remember that these internet companies are innovating and expanding quickly. If you spent your money on a small publisher with less underlying technology, would you be able to follow up on new emerging demographics, be able to extend your campaigns to cover emerging devices such as smart speakers or virtual reality, or be reassured that privacy (yes, the big internet companies are still more likely to be able to provide security and privacy in their data clouds versus small players) is a priority?
- Fourth, these players are able to provide a more native experience. They control the screen time, and the user experience, with their apps and services. Unlike the ‘bulk internet publishers’, Facebook and Google spend hundreds of millions in iterating on the user experience and figuring out how to best introduce ads into the flow. If you want to make sure that your advertising is seen and remembered, the more native experiences that the big internet companies are able to ensure are a plus.
- Fifth, although I’ve espoused the many advantages of the big two, it’s vital you aren’t blinkered into thinking that they’re the only places to effectively reach people. More niche publishers can be more appropriate when you want to specifically make an impact in a narrower target segment or with a specific demographic.
As shown in the chart above — which may be surprising to call out — younger people (the next generation of mobile users) don’t care so much about Facebook’s services (they find them boring) and also don’t necessarily tune in to all of Google’s offerings, either. Just 11% of Facebook and Google’s adult audience in the US are 18-24, while in the UK it’s not much higher at around 14%.
A new generation of internet services, such as group video chat app Houseparty (which Facebook is apparently looking at), is building high-retention services and apps for younger people. Make sure your campaign radar is capable of picking up all those orbiting satellites around the two major sun-sized planets.
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