Welcome to the Ad Duopoly: Google and Facebook

November 14, 2017November 14, 2017 Phillip Nones Advertising, Marketing, Marketing Communications, Social Commentary, Social Media Advertising Duopoly, Advertising Trends, eMarketer, Facebook, Google, search engine marketing, SEM, Social Media

Unless you’ve been living under a rock, it’s pretty obvious that the advertising marketplace in America has changed radically in the past few years.

In short order, we’ve seen the largest concentration of digital advertising converge on just two players: Google and Facebook. In fact, according to digital advertising research firm eMarketer, those two firms alone are attracting two-thirds of all digital ad dollars in the United States.

But this development isn’t all that surprising. The vast bulk of Google’s ad market share results from its search engine marketing platform (paid search). As for Facebook, it dominates digital display advertising not just in America, but in many other countries all over the world as well.

And both companies are the “big kahuna” players in the mobile advertising sector, too.

What’s interesting is that, despite the shortcomings that many people recognize in both types of digital advertising – banner blindness and often ill-targeted paid search results — healthy growth in both forms of advertising continues apace.

Google’s ad revenue growth has average around 20% for more than 30 straight quarters. Its growth in the third quarter of 2017 is right on pace at 22%.

For Facebook, the growth dynamics are particularly lucrative; its year-over-year ad revenue growth is pushing 50%.

Mobile ad revenues are growing even faster; they accounted for “only” $9 billion in revenues for Facebook in just the third quarter. And just as paid search advertising revenues represent more than 90% of Google’s total company revenues, mobile advertising accounts for nearly 90% of Facebook’s overall revenues.

With so much advertising activity, one might wonder from where it’s emanating.

One answer to that question is that the “universe” of advertisers is exponentially higher than we’ve ever encountered before. With low barriers to entry and “anyone can do it” ad development tools, “Jane and John Doe” are far more likely to be advertisers in today’s world of digital marketing than was ever contemplated just a few decades ago.

To wit: Facebook estimates that its social platform has more than 6 million active advertisers participating on it at any given moment in time. That’s the equivalent of 2% of the entire population of America.

It’s kinda true: “We’re all advertisers now.”

Momentous milestone? U.S. advertising dips below 1% of GDP for the first time in living memory.

April 12, 2016April 12, 2016 Phillip Nones Advertising, Business, Economics, Media, Media Consumption, Sales Advertising, advertising industry, Advertising Trends, Bernstein Research, Magna Global, Media, MediaPost, Sanford Bernstein, Todd Juenger

The advertising industry has often been characterized as “boring.” This 2014 analytical article from Bloomberg encapsulates the argument pretty succinctly.

Still, the “lay of the land” in the late 2000s and early 2010s represents a bit of a changeup from the previous decades of predictability.

During the period beginning the late 2000s when the “advertising recession” hit in an even bigger way than the overall U.S. economic recession, I’ve heard various industry insiders posit that there was more than merely a retrenchment happening due to overall economic conditions.

Beyond that, it was suggested that a migration was happening away from traditional advertising methods to more measurable ones.

Now we have more than just hunches to go on — and the results appear to be aligning with those suspicions.

The new evidence comes in the form of statistics released this week and reported on by MediaPost.

According to an analysis of ad spending trends published by Sanford Bernstein Research and Magna Global, for the first time in modern history U.S. advertising industry revenues have dropped below 1% of total U.S. Gross Domestic Product.

During the period 1999 to 2010, total advertising averaged 1.25% of GDP, but since then the percentage has stagnated or fallen. The 2014 total advertising estimate of $165 billion is 0.95% of GDP. (The Bernstein/Magna research covers U.S. advertising revenues up through the year 2014.)

The decline in advertising’s share of GDP is primarily due to the diminishing importance of two key traditional media categories: broadcast TV and cable TV.

Broadcast TV advertising’s annual revenue growth averaged around 3% per year between 1990 and 2010. Since 2011, it’s been flat.

Cable TV has done somewhat better – but even there what had been around 12% growth per year has slowed to just a ~3% annual increase.

With such big baseline numbers for broadcast and cable TV, the behavior of these two broadcast categories have been key drivers of the advertising sector’s overall performance.

But we mustn’t forget another category that’s been performing pretty miserably of late: newspaper advertising. It’s experienced a ~10% decline on a compound annual basis from 2010 to 2014.

That decline is even steeper than earlier projections had suggested.

Todd Juenger, a vice president and senior analyst at Sanford Bernstein, made a key takeaway observation about the newly published figures, noting:

“Our original piece theorized [that] advertising would recover to prior levels. Instead, it has remained deflated, suggesting the perhaps the Internet really has enabled marketers to eliminate waste.”

He’s right, of course.

Print Publications: Hanging In There?

December 18, 2011December 18, 2011 Phillip Nones Uncategorized Advertising, Advertising Trends, Magazines, MediaFinder, Meredith, Meredith Engagement Divident, Nielsen, Oxbridge Communications, Print Media, Print Publications

There’s one thing you can say about print magazines: They’re not giving up without a fight!

The latest evidence of this comes in statistics released by Mediafinder®, a magazine tracking service run by Oxbridge Communications. It turns out that in 2011, there were 239 print publications launched in the United States and Canada. That’s a 24% increase over 2010, when 193 magazines were launched.

And at the other end of the scale, the number of magazines that ceased publishing in 2011 decreased over the previous year: 152 versus 176.

Actually, new magazine startups as well as closings are down significantly from just a few years ago. The worst year was in 2009, when a whopping 596 print magazines closed (but also 275 were launched).

Reviewing the stats, it’s not hard to understand the dynamics as to why print magazines have been on the ropes. For starters, magazine newsstand sales have dropped by nearly 50% over the past decade. And ad pages in consumer magazines fell more than 30% just between 2006 and 2010.

And in 2011 year-to-date, ad pages are continuing to track a smidgen lower (-1%), but at least the trend is now nearly flat rather than steeply downward.

To be sure, magazines have tried different tactics to stem the slide. One of the more interesting moves has been by the publishing firm Meredith Corporation, which announced a plan in the summer to begin guaranteeing that advertisers’ magazine buys will yield an increase in sales for their products or services.

Dubbed the “Meredith Engagement Dividend,” the program represents a new level of accountability for “analogue” media, which long relied on fuzzier metrics like audience reach and before/after market research.

The publisher’s new program is available to advertisers who commit to a minimum level of advertising impressions annually across multiple Meredith magazine titles. It works by correlating Meredith’s magazine readers with Nielsen’s Homescan (National Consumer Panel) service. That’s the same marketing research resource many top consumer products firms use to measure their product sales.

The Nielsen/NCP database of ~85 million consumer magazine readers is used to correlate the effect magazine ads have on resulting product purchase behaviors.

Meredith claims the research shows that advertisers in four key categories – household goods, beauty products, OTC drugs and food – have increased their product sales an average of 10% via ads placed in the Meredith publications. That claim is based on measuring the sales impact of “higher frequency” ad campaigns that ran during 2009 and 2010.

It’ll be interesting to see how the performance of print magazines evolves over the next few years. For now, the steep slide appears to have ended, but there’s no real evidence of a turnaround. The question is whether publishers can adjust their operating models to continue to work within the new, lower level of business activity.

Maybe they’ll succeed. You know … hope and change and all that.

Magazine advertising finally sees an uptick … sort of.

April 11, 2011April 11, 2011 Phillip Nones Uncategorized Advertising, Advertising Trends, Bloomberg, Business, Business Week, BusinessWeek, Center for Scholars, Economist, Economist Magazine, Elle, Harman International, Harman/Kardon, Harper's Bazaar, InStyle, Jane Harman, Magazine Advertising, Magazines, Media, Media Advertising Publishers Information Bureau, New Yorker, News, Newsweek, Nones, Nones Notes, NonesNotes, Phillip Nones, PIB, Print Advertising, Print Media, Publishing, Sidney Harman, The Week, Thoughts, Time Magazine, Tina Brown, Vogue Magazine, Wilson Center, Woodrow Wilson International Center for Scholars

Could it be that print magazines are finally on the positive side of the “U” in their recovery? The most recent stats on print advertising activities suggest that this may be so – if only slightly.

In statistics released this past week by Publishers Information Bureau, this data aggregator found that across all of the magazines tracked by the bureau, print advertising rose ~2.5% during the first quarter of 2011 compared to the same period last year. While not large, it is a gain, which is better news than most publications have had in quite a while.

PIB charted advertising growth in seven of the twelve advertiser categories it tracks, with the following segments showing increases year-over-year:

 Apparel and accessories
 Automotive
 Cosmetics and toiletries
 Drugs and remedies
 Financial, insurance and real estate
 Media and advertising
 Technology

As for the other categories, advertising was roughly even in women’s fashion and beauty magazines, while advertising categories that continued to decline were retail, food, home furnishings, and travel.

More specifically, how did some of America’s largest and most famous magazine brands fare? The answer is: “It depends.”

 BusinessWeek: +49%

 Elle: +15%
 Vogue: +11%
 Glamour: +6%
 The Economist: +4%
 The New Yorker: +4%
 Time: +3%

 InStyle: -4%
 Cosmopolitan: -9%
 Harper’s Bazaar: -11%

 Newsweek: -31%

There are explanations behind the outliers’ advertising performance. BusinessWeek has undergone an extensive redesign since its purchase by Bloomberg, and major resources have been poured into the publication to raise its profile and editorial muscle.

At the other end of the scale, Newsweek has struggled in the wake of its purchase by nonagenarian Sidney Harman, the retired chairman of Harman International Industries (Harman/Kardon) and husband of Jane Harman, executive director of Wilson International Center for Scholars and an ex-congressperson from California. Bringing Tina Brown onboard as “celebrity editor” at Newsweek hasn’t paid big dividends yet – at least in terms of advertisers returning to the magazine.

Does the uptick in advertising mean that print magazines are out of the woods yet? Hardly. Let’s not forget that the improved advertising figures are coming off of 2010’s low base levels that are nothing short of ugly. Print advertising is slowly emerging from the worst business environment faced by magazines since the Great Depression, after all.

But at least the direction is now “up” …