Digital Duopoly changes to Triopoly

20 Dec,2021

 

 

By Indrani Sen

 

Indrani SenIt is established now, the Google and Facebook duopoly in digital advertising has been converted to a triopoly by Amazon. With the rapid growth of Amazon’s share, the global online advertising size is expected to cross $88 billion by end of 2021. Google and Facebook together hold above 50% market share with other major players like Amazon, Microsoft and Twitter competing with each other for the rest. The data released by eMarketer in October, 2021 for a period 2019-2023 shows that the combined share of Google and Facebook are going to decline further over the next two years to be just 50.5% in 2023 as against 55.2% in 2019. Along with Amazon, the triopoly will hold 65.1% share in the online advertising market in 2023. Industry experts feel that similar effects will soon be seen all across the world.

 

 

A recent article (https://www.exchange4media.com/marketing-news/digital-advertising-is-not-a-two-horse-race-between-google-and-facebook-daryl-lee-117323.html) based on an interview of Darry Lee, the global CEO of IPG Mediabrands, was published using a quote from Darry Lee as the headline “Digital advertising is not a two-horse race between Google and Facebook.”

 

In this connection, read recently an excellent analysis by P.K. Kannan, Dean’s Chair in marketing science in the Robert H. Smith School of Business at the University of Maryland, who analysed the impact of increased Amazon’s presence in digital advertising and the reasons behind Amazon’s success( https://www.clickz.com/amazon-presence-digital-advertising/220935/).

 

Prof. Kannan argued that in order to understand the unique advantage of Amazon, we need to address the basic question of what marketers gain from advertising online, which is primarily acquiring customers at the lowest cost. He argued that “Google and Facebook provide marketers access to the online traffic they control and use sophisticated targeting algorithms to match a marketing message to the right set of online users.” However, as we all are aware the final effectiveness of this targeting is based on the motivations and inclinations of the online consumers as they surf through different websites on the internet. A consumer may just be interested in interacting with her friends on Facebook. A visitor at Google may just be looking for references related to his research studies. Against this the motivations for consumers on Amazon is either shopping or searching for making a decision related to shopping. So, the chances of a consumer reacting to a context-appropriate message is much higher for visitors in Amazon, which increases the click through rates. Internet users are also in the right mindset when they visit the Amazon site than when they are on Google and Facebook.

 

As the platform itself is a marketplace, Amazon has a unique advantage of having previous knowledge of shopping behaviour of the consumer and can use that to position the message of the advertiser more effectively and also use AI and other techniques more effectively to provide recommendations to the advertisers. Prof. Kannan argues that “Amazon Prime shoppers are an especially attractive segment for marketers to go after, and Amazon could charge even more for online ads targeting them.” With precise targeting brands advertised on Amazon may become more prominent with the shoppers quickly. This has two built-in benefits. Firstly, it enables in relationship building with the consumers and secondly, it improves the organic search rankings.

 

In addition, a marketer may have to worry about the type of user generated content his/her ad would appear on Google’s YouTube or on Facebook. Amazon, on the other hand has a complete control of all the content that appears on its own e-commerce platform. Advertisers may prefer Amazon as it reduces the risk of ads appearing in the wrong environment.

 

So, it seems almost certain that the digital duopoly of Google and Facebook is in the process of changing to a triopoly not just in the US market, but across the world in developed and developing countries.

 

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