By Gene Marks, for The Inquirer Philly.com
WWR Article Summary (tl;dr) A new report predicts that not only will online advertising make up more than half of all the advertising dollars spent by 2022 but also that both Facebook and Google combined will control 80 percent of that spending.
If you think that Facebook and Google pretty much control the Internet, you're right-at least when it comes to advertising.
And that can be bad news to some smaller firms, particularly ones that run afoul of Google and Facebook’s oftentimes draconian advertising rules that restrict the promotion of potentially controversial merchandise and services such as unregulated drugs, certain “adult” products, pay-day loans, and weapons.
“The monopoly Google holds in the search market can literally put a death sentence on your small business, if your company or the industry you are in is blocked from placing paid search ads,” says Joe Butch, a digital-marketing manager at Recovery Centers of America.
Last year, Google had suspended advertising by the King of Prussia-based network of addiction centers, blaming certain treatment providers that were doing what Google deemed false advertising. “Without any sort of government regulations, Google is deciding who can and cannot continue on their platform, and Google’s decisions are final in most situations.”
That issue is on the minds of many small-business owners and publishers this week after the release of the State of Digital Media report by Polar, a technology firm that helps publishers market branded content.
The report predicts that not only would online advertising make up more than half of all the advertising dollars spent by 2022 but also that both Facebook and Google combined will control 80 percent of that spending.
In 2018, advertisers spent $169 billion with the two companies -- which included fast-growing platforms such as Instagram (owned by Facebook) and YouTube and Google Maps (both owned by Google) as compared to the $29 billion received by Amazon, Microsoft, Twitter, Oath and Snap combined.
“Google and Facebook have a forceful hold on today’s digital-advertising industry, meaning brands can’t walk away from them,” John Nardone, the CEO of ad management and analytics technology company Flashtalking, recently wrote in Forbes. “There is an urgent need to start building a more open ecosystem where brands have greater choice and more control.”
The two companies' dominance is being felt mostly in the world of publishing, where their stranglehold on third-party content is siphoning direct ad revenue away from many online content providers, the effect of which is being partly attributed to the recent layoffs reported by Vice Media, Buzzfeed and the Huffington Post.
But it’s not just publishers that are affected by the Google/Facebook duopoly. As the two companies' hold on the online advertising market grows, small businesses that advertise there are also facing fewer choices -- and potentially rising costs. But is this such a bad thing?
“It depends on what you’re selling,” Rick Simmons, a Philadelphia-based marketing expert and owner of Simmons Online Solutions, told me. "It is less about the duopoly than it is determining the where – who exactly are your prospects and what do you know about them so you can be in front of them.”
Simmons is right. When I launched my online training business last year, my marketing choices were obvious. Using specific keywords, I relied on Google AdWords combined with both banner and display ads to get my site placed high in my target audience’s search results. I also tinkered with some Facebook ads because of the flexibility in narrowing down my audience and targeting messages directly to the users that I thought would most be interested in my products. The combination of both drove thousands of prospective subscribers to my site over the course of just a few months. Of course, getting those visitors to sign up has been another challenge. But that’s on me.
“One thing that both Google and Facebook have in common is boatloads of data,” said Pat Walsh, who runs the Walsh Group, a digital marketing firm based in Warrington, Pa. “Google Ads use the person’s geography, browsing history, and, most important, the search terms to create relevant advertisements that your prospect will likely click on. Facebook Ads equip themselves with an incredible amount of demographic data that Facebook compiles such as age, sex, income, interests, etc. So those beauty products can be to “women over 40”, in a household earning over “$90,000,” and have an interest in “fashion” and live within “25 miles” of your “zip code.” Walsh recommends starting with a small budget - maybe $500 a month - and building from there.
There are still plenty of marketing choices other than Google and Facebook for a small business, such as advertising in local publications, email campaigns, billboards, cable television, and even direct mail and telemarketing. But the fact of the matter is that most small businesses -- pizza shops, auto mechanics, landscaping services, and clothing stores -- want to be found online, even if they’re not selling their products or providing their services online.
So it’s back to Google and Facebook, right?
Not entirely. There are other options besides the Google-Facebook duopoly. Other platforms with millions of users -- such as Snap, Twitter and Yahoo -- remain independent.
Also, with the growth of its Echo and Kindle devices, many industry watchers are predicting that Amazon may turn into a major player that will take market share away from Google and Facebook. “Its strong handle on consumer purchase behavior sets it apart from Google and Facebook in the digital ad market, which has made the company an attractive option for advertisers,” Monica Peart, senior director of forecasting for eMarketer, said in a recent report.
Whichever advertising platform is chosen, I’ve learned that you can’t do it alone. Employing a marketing professional has become necessary mainly because online advertising requires its own form of expertise and a commitment of time that most small business owners such as myself just don’t have.
-- Gene Marks is a certified public accountant and the owner of the Marks Group, a 10-member technology and financial management consulting firm in Bala Cynwyd.