Advertising’s COVID Consolidation

The triumvirate of Amazon, Facebook and Google surge to even bigger dominance in the field.

Fueled by their ability to target audiences by attitudinal and intentional factors in addition to demographic characteristics, the “Big Three” platforms of Facebook, Amazon and Google were already heavy hitters in the advertising realm well-before COVID-19 burst on the scene.

To wit, they accounted for nearly 50% of all advertising expenditures in the United States in 2019.

Then the coronavirus pandemic hit, resulting in changes overnight in how people work and live.  Thanks to lockdowns — and with more people than ever glued to digital platforms for everything from business communications to entertainment and online shopping — advertisers found the audience-targeting capabilities of the Big Three platform too irresistible.

So in 2020, even as every other kind of ad spending shrank – including double-digit drops seen in newspaper, TV and billboard advertising – online advertising continued to grow.  Even more significantly, the biggest gains in online advertising accrued to the Big Three tech giants rather than to digital media sites and publishers that sell online ads.

When the dust settled, 2020 turned out to be the first year the Big Three swept up more than half of all ad dollars spent in the United States, according to an analysis by ad agency GroupM

… And in online advertising specifically, the Big Three’s share jumped from an already dominant ~80% in 2019 to nearly 90% in 2020. Ad industry veteran Tim Armstrong (formerly in executive positions at AOL and Google), puts it succinctly:

“[The] companies that are data science-driven get stronger and faster with a tailwind of usage — and COVID was a hurricane.”

The coronavirus environment proved to be fertile ground for the Big Three even in areas previously inhospitable to them — including such categories as store promotions, catalogues and couponing.

As the nation emerges from the COVID environment in the coming months, one wonders if the newly dominant position of the Big Three will retrench in any meaningful way.  Speaking personally, I wouldn’t bet money on it.  But what are your thoughts?

2 thoughts on “Advertising’s COVID Consolidation

  1. One begins to wonder if the Big Three won’t gradually become so intertwined with us and with each other that we someday stop thinking of them as separate companies and perceive them instead simply as a utility “system”, the way we now think of electricity, water and telephony.

    Few people worry about what electric company you sign up with or which waterworks is responsible for your taps and sewers. One is either on the grid –or not.

    Amazon and Facebook and Google certainly aren’t going away, any more than electric and phone companies with separate names went away. But the services they provide may become one day such an important part of our lives, we could forget their names …

  2. Southeast Asia also has its “Big Three” but they aren’t Amazon, Google or Facebook. From https://www.webretailer.com/b/online-marketplaces-southeast-asia/:

    “Southeast Asia consists of 11 countries, with six of those leading the region economically: Indonesia, Thailand, Malaysia, Singapore, the Philippines and Vietnam. With a combined population of 655 million, a young demographic and online retail sales projected to grow by 44.4% annually, Southeast Asia is an exciting region for ecommerce.

    “The region has a rich landscape of local ecommerce companies with brands that will be recognized by few people outside SE Asia. The largest players, including Shopee [Singapore], Lazada [owned by the Chinese giant Alibaba] and Tokopedia [Indonesia], are online marketplaces selling a diverse range of goods, similar to the Amazon model. They take a large share of Southeast Asia’s total online retail sales, which are forecast to reach $55 billion in 2020.

    “Despite the similarities of Southeast Asia’s local online marketplaces to Amazon, it is a region where Amazon is a very small force. It launched in Singapore in 2019, but still lags far behind local alternatives. Chinese ecommerce brands do not have a strong ecommerce presence in the region either. There has, however, been billions of dollars of foreign investment in Southeast Asia’s ecommerce industry, from both China and the West.”

    Beyond these Big Three, the major platforms for online advertising in Southeast Asia are Facebook, Instagram (owned by Facebook), YouTube (owned by Google) and Line (Japan).

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