Facebook and Google gobble '99 per cent of new digital ad cash'

Internet advertising revenue continues to grow, thanks to mobile, but the Silicon Valley duopoly of Facebook and Google swallowed up almost the new money. The internet ad industry's annual report this week shows that desktop ad revenue fell for the first time since the financial crash of 2008/2009 and mobile spending raced …

[jmch]

Value for money??

I wonder when companies buying the ad space will cotton on to (a) just how ineffective / counterproductive / hated their online ads are and (b) that the advertisers are billing them based on statistics that are devised , collected and processed by the advertisers themselves in a totally non-transparent way, so they have no idea what thy are actually paying for

[Anonymous Coward]

Re: Value for money??

Never. Advertising buyers have always been beholden first to their ad agency, who in turn were beholden to the owners of advertising space, be that in publications, cinemas, or on hoardings. At the high volume high value end of the market there wasn't much competition between the big agencies, and less for advertising space, and most advertising spend since forever has been wasted.

All that's changed is that the ad agencies are being pushed back along the value chain to focus on the "creative" stuff, and the ad placement and access market has been slurped by Google and Facebook. Advertising budgets aren't materially different to before, the accuracy and outcome are no better, its just that a smaller number of companies are hogging the cash. But if you're a marketing director, your job is to spend your ad budget, to prattle on about click conversions etc, and so long as the board think you're "doing marketing" nobody cares about the vast inefficiency of the whole advertising sector.

[Anonymous Coward]

Re: Value for money??

It's the emperor's clothes dilemma. Nobody wants to accept the truth for fear of looking stupid. Marketing departments know no one could blame them for putting the ads money where everybody else is putting them, even if sales results may say otherwise.

[Anonymous Coward]

Re: Value for money??

The "Nobody ever got fired for buying IBM" of the online advertising/SEO business

[P. Lee]

Re: Value for money??

Except that it does actually work... which surprised me.

I had a friend who advertised a new product through fb with particular demographics specified. They got increased sales from the campaign and given that it was pretty much their only marketing, its reasonably safe to say it worked.

Sure, the response rate was tiny compared to the reach, but that really doesn't matter. It only takes a vary small percentage of people to be interested to make it worthwhile and it was far, far cheaper than a magazine advert which would also be mostly "wasted." That's why we have a couple of very large companies - as an advertiser you want maximum coverage, knowing full well that almost all of the advertising will be wasted. But "wasted" is just a cost of doing business. The advert buyers know its mostly wasted, just like it is with billboards and TV. That doesn't really matter.

I'm less concerned with adverts per se, than the really annoying ones which expand to cover large parts of the the screen, but that isn't just adverts, I hate menus on websites which do the same thing.

[Ken Hagan]

Re: Value for money??

"I had a friend who advertised a new product through fb with particular demographics specified. They got increased sales from the campaign and given that it was pretty much their only marketing, its reasonably safe to say it worked."

It says nothing of the sort. You say "advertised a new product" which strongly implies that you changed the bleeding product on offer to punters! It is hard to imagine a more significant variable to change prior to hunting for a change in sales figures.

[Anonymous Coward]

Google's Ad-Blocker browser will be nothing of the sort

It will be a product which 'whitelists allowed ads' - so you have to pay these racketeers twice - once for the privilege of advertising with them in the first place and a second time to make sure those ads don't get 'lost' by their browser.

Classic Protection racket - "Nice advert you've got there, it'd be a shame if something happened to it..."

[Anonymous Coward]

hmmm...

Anybody know a good mobile add blocker for Android? Or is that not in existence yet?

[Anonymous Coward]

Re: hmmm...

Free Adblock Browser

Very stable and works a treat to block ads without killing the web site you are visiting

[stephanh]

Re: hmmm...

If you use Firefox for Android you can choose from many addblocker extensions. I use uBlock Origin.

[e^iπ+1=0]

Ad blocking

"I use uBlock Origin."

Me too. Also, I use AdAway (requires root, updates hosts file), which helps block in-app ads.

[Anonymous Coward]

Funny that this is the competitive situation people choose to focus on. Google... and Facebook have a monopoly over the market. How can two fiercely competitive companies create an anti-competitive situation? The question is - Do people have options? In every case, the answer is yes. Advertisers can obviously choose between facebook and Google, but they can also buy TV ads, billboards, send out direct mail or email... about a thousand other ways to advertise online. Yes, Google and fb are huge online properties so they are almost certainly going to buy from them, but nothing really unusual there. Kind of like they would probably advertise on NBC, CBS and ABC in the US because they were the three major TV networks. Do consumers have choice? Most definitely. You can use Snapchat, G+, LinkedIn, or nothing at all for social. Social is totally optional. Search is not really optional. You almost have to use it. There are many other options though, Bing, DDG, Yahoo, etc. Google is way better than them, so you will probably use Google... but that is the critical point, you use them because they are better. Not because you don't have other choices. That isn't anti-competitive. That is Google winning a competition.

Lets compare this situation to, oh, I don't know... Microsoft! In the 90s through 2000s, you had no choice as a business but to use Microsoft Windows. They brutally put down anyone who tried to enter their markets, almost always using anti-competitive tactics. For instance, telling the PC makers that they needed to pay for a Windows license on every non-Windows PC they sold (Linux) at a discounted rate... or only pay for Windows PCs, but pay full list price. Essentially making it unprofitable to ever sell non Windows PCs. Microsoft then took their monopoly (actually declared a legal monopoly in the US, the gov just didn't do anything about it) and used it to strong arm the productivity market, Office, through similar pricing tactics. Google and Apple have broken this up in the consumer market, but this situation largely still persists today in the enterprise. Microsoft's legacy, long complained about products are force fed..... This would seem to be a much, much better monopolistic abuse case to go after than digital advertising. It seems like people have just given up on it because Microsoft has had an "abusive dominant position" (US Fed Judge) for so long that people have just decided to, ironically, try to take a crack at providers who are less dominant and abusive because maybe they'll get a settlement. Whereas MSFT will just tell the regulators to go blank themselves, come at us.

Fix Microsoft. Then come and talk to me.

[Anonymous Coward]

So Google can win the competion with Search...

... but Microsoft couldn't win the competition with Windows? Sure, everybody used Windows only because the MS Gestapo forced them one by one, not because Windows applications were available and better.... Linux didn't really exist in the '90s when Windows became the leader, and could blackmail others to strengthen its position.

MS Office back them was much pricier than the competition, and sold well anyway - because the rest (unluckily) became crap - I know, I tried to use WordPerfect and WordPro...

But it looks you're a millenial grown up babysit by Google.

While Google of course is not using anti-competitive tactics as well - i.e. forcing its services on Android mobes, including its Search? It's exactly the same tactics used by MS to force PC makers to sell Windows. Sure, you can do without... but then almost nobody will buy your products...

And you conveniently forget that MS was fined and forced by EU antitrust to offer different browsers and open its protocols - and especially the latter greatly benefited Linux.

Thousand of ways to advertise online? Maybe, just Google controls the most of them, and FB almost the rest. Sure, you can always avoiding using a PC and just watch TV, you could do that twenty-five years ago as well, and use a typewriter and calculator.

Nor Facebook stays only inside it "walled garden" - what are all those "sponsored contents" and "like" that appear when I'm reading my newspaper site??

It's always funny how some people are trying to brainwash others into thinking Google is good, Facebook too, while only MS is evil. I wonder if those aren't "sponsored contents" too.

There's no difference among them, or other megacorps. Let them do whatever they like, and we the people will pay the price.

[Anonymous Coward]

Re: So Google can win the competion with Search...

"Sure, everybody used Windows only because the MS Gestapo forced them one by one, not because Windows applications were available and better"

Everybody used Windows at the outset because it was tied to DOS, initially. They used DOS because everyone used IBM and IBM, to their great regret, chose to use MSFT to create the PC OS. After the app providers all lined up on IBM's OS, which happened to not be IBM's OS, MSFT had their dominant position as porting was a large effort. Even so, not arguing that they got their dominant position through anti-competitive tactics. After they got the position though, they most definitely retained the position through anti-competitive tactics... that is a finding of fact in US Federal Court, not just my opinion. Abusing the OEMs, which they certainly did do, was not even the worst of it. The situation which got them dragged into court was their outright shameful treatment of Mosaic/Netscape. Mosaic invented the internet browser in modern form. A huge innovation. MSFT came to them and offered to wrap it into Windows and pay a royalty to Mosaic. As MSFT dominated the computer market, Mosaic took their deal. Microsoft turned their tech into IE and eventually created proprietary ActiveX to lock down websites into IE.... the shameful bit was that MSFT, despite having a license to print money, decided to snake Mosaic. When Mosaic came to MSFT asking about their royalties, as their tech was running on every computer, MSFT told them to read their contract. They were entitled to a percentage of web browser sales. As MSFT decided to bundle IE with the price of Windows, web browser sales amounted to $0. So Mosaic was entitled, according to MSFT, to zero dollars.... Totally unnecessary on MSFT's part. Mosaic wasn't even asking for that much money. They just pushed them around because they could and that's how they operate.

Lotus was the market share leader by a mile in productivity. MSFT had developed apps going back to Mac 2 and they were as Steve Jobs' once described them "terrible." Their original MultiPlan spreadsheet software was hammered by Lotus 1-2-3. They took over productivity because of its connection and integration, technically and in pricing bundles, with Windows.

Android and Windows are not at all similar situations. Google makes all of their money on Android via search and a tiny bit via Play Store. That is their monetization. They don't prevent people from using other browsers and search engines, but they default to Google.... much like Microsoft does in Windows with Edge and Bing in addition to charging you. Google has never told an OEM on Android that they can't ship another OS or must pay them if they ship another OS in the same way Microsoft did with Windows... telling OEMs that they still had to buy a Windows license even if they shipped Linux PCs. Nothing even comparable.... A comparable situation, which does not exist, would be if Google told Samsung and Lenovo that they can't use Android any longer unless they stop making Windows PCs. Never happened.... Also, Microsoft makes more cash on Android directly than Google does. It is amazing. Microsoft just shook down the OEMs, Told them that they would sue them into the ground for supposed violations of MSFT phone patents, as laughable as that is. The OEMs just decided to pay off MSFT as they didn't want to get in a multi-year lawsuit with MSFT over patents. Google themselves is the only Android phone maker that just told MSFT to go ahead and sue them over these bogus patents because they were not going to pay MSFT to license their supposed phone patents. MSFT decided to just go away. Made the mistake of picking on someone their own size.

There are alternatives to using Google or fb for online advertising. Microsoft actually runs a pretty large one. There are many alternatives to Google's DoubleClick ad network. Rubicon for instance. Many others.

[bombastic bob]

you mean Bing and Win-10-nic barely had any?

if Bing and Win-10-nic and MSN and other Micro-shaft ad-revenue-generators did less than ONE PERCENT, then WHY oh WHY did Micro-shaft "go there" with Win-10-nic?

it ain't working, yeah. they should give up and go home, and do what they're known to do "reasonably well", and NOT try to be Google and Facebook, a day late AND a dollar short (for that matter).

[William 3]

One reason I kicked Android to the kerb.

An ad company isn't likely to allow you to block ads on it's platform.

[Mikel]

Winning is simple

Know the audience, make the ad relevant, and they will buy the thing more often. You can charge more for the ad, show less of them, and motivate the audience to not block them because they might be relevant to their needs.

Google and Facebook simply do this better than anybody else. Amazon too.

[Anonymous Coward]

Re: Winning is simple

Relevant ads? It's just BS they sell to marketing execs, to lure them into believing online advertising bring an higher ROI than other types.

But most of the time, even if "relevant" in some way, they are just usually intrusive. Because every time I use the internet, it's not because I'm going to buy something Probably that happens only it the mind of marketing execs, who believe the internet was just created for that - maybe I'm just interested is doing something else, and your dammed ads only get in the way.

Actually, I find magazine ads more useful. Because I can easily skip them - and there aren't tens on each page - when I'm reading an article, and maybe return to it later if interested. For example, I still read an astronomy magazine. After reading the articles, I may give a look to the ads promoting gear - and they usually have much more useful information than a stupid online ad, which could make me look for more info.

About Amazon, it has really no clue about "relevant ads" - usually it just tries to sell me another item more or less the same type of one I already bought. Just if I bought a $800 printer, for example, there's very little chance I'll buy another one. If that's the best of theirs AI algorithm powered by the cloud, well, it looks they invented the BS algorithm, nothing more.

People don't "buy more often" because they don't "earn more often" thanks to online ads (but Google and FB). All you can to is trying to make them spend their limited money on your goods instead of a competitor. Amazon makes money because you have a good chance of finding what you're already looking for at a good price, and have it delivered at home. Se less lost sales because lack of the requested goods. Not because of its ads.

[e^iπ+1=0]

Relevant ads?

Relevant ads? May work for pet food; not for pet cemetery.

[Ken Hagan]

Re: Winning is simple

"But most of the time, even if "relevant" in some way, they are just usually intrusive. "

Isn't that the weirdest thing? Having identified that you, LDS, are the kind of person who is likely to buy their kind of product now or in the future, they target you, LDS, with intrusive and annoying ads in your day to day life.

"OK, Google ... give me a list of potential customers. I want to poke them all in the eye with a sharp stick. A branded sharp stick, mind you, so that they associate me with eye-wash and stabbing pains."