September 25, 2019
Google has long been the top digital advertising platform in the U.S. in terms of revenue. But as regulators question whether it's been giving itself an unfair advantage, the company's best defense might be the increasing number of companies it now has to compete with to grow its advertising revenue.
In September, attorneys general for 50 U.S. states and territories launched an antitrust investigation into Facebook ($FB) and Alphabet ($GOOGL), Google's parent company, which is expected to include a look into how their dominance in digital advertising could be stifling competition. The Justice Department announced a separate investigation over the summer to examine antitrust concerns among big tech companies.
Google's ability to control the tech systems that facilitate ad buys on its platforms, its ability to acquire other advertising companies, and the ability for its internet browser Chrome to stop competitors from creating consumer data profiles, are among the ways critics claim it has restricted other advertising businesses.
But Google argues that it has done more good than harm for the industry, allowing brands with smaller budgets to purchase advertising. Allowing anyone to become a digital marketer has leveled the playing field, it claims.
"Google has been a democratizing force for marketing," said Google Americas president Allan Thygesen, who oversees the company's North and South American advertising business. "Marketing used to be a club that only larger advertisers could get into, and we've offered advertising services to all clients."
As more people shift to digital shopping, companies are finding increasing opportunities to earn for digital ad revenue. The digital advertising landscape has become more competitive than ever, Thygesen argues.
Google and Facebook facilitate the majority of U.S. net digital ad revenue, making up 37.2 percent and 22.1 percent of the market, respectively, in 2019 according to eMarketer. However, this year marks the first time its combined percentage share has decreased compared to previous years. Third place goes to Amazon ($AMZN), which will increase more than 50 percent year-over-year, though it still just comes in at 8.8 percent of budgets.
"We are competing head-on with the Facebooks, Amazons of the world," Thygesen said. "You've got carriers like AT&T, Verizon, Comcast very active in the advertising business, so there's no lack of competition."
To encourage advertisers to increase their ad dollars with Google, the company is reminding marketers that consumers look for information when they are shopping — and it owns those portals like Google Search, YouTube, and Google Maps. Combined with the amount of precise data Google can provide to prove its ads led to sales, the company believes it offers a unique proposition.
Google recently announced it would be bringing its YouTube Masthead ads to television. When a viewer opens the YouTube app on their TV, they can see a sponsored ad playing before they get to their content. The ad unit was previously available on the YouTube desktop experience, and Google saw YouTube viewers were open to auto-play ads as long as it was personalized. Overall, the amount of ads that show up on YouTube are "a fraction of what is on TV," Thygesen pointed out.
Meanwhile, as consumers move away from traditional pay TV models, advertisers are seeking ways to get in front of them through streaming media. Because so many services are subscription-based and don't allow advertising, Google is seeing an opportunity to provide that free, ad-supported viewing experience customers and brands alike.
"If you look at it from an advertising perspective, it's getting harder and harder to reach consumers," he said. "It's very important that there are video-based platforms that are ad-supported where they can reach consumers. So there's a very important role for YouTube both for consumers who are looking to have free experiences that are for everyone and for advertisers who are looking for places to reach consumers."