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MARCOM Business

The Business of Marketing Communications

Google’s Ad Revenue Expected to Drop; Facebook, Amazon Grow

MARCOM Business | Google’s Ad Revenue Expected to Drop; Facebook, Amazon Grow
The ad revenue market tumbled in Mid-March when millions across the world were quarantined and businesses were shut.

The ad revenue market tumbled in Mid-March when millions across the world were quarantined and businesses were shut. Led largely by travel, retail and food, ad spending by brands took a nose-dive as majority of companies took to cost cutting measures. The pullback naturally affected traditional media outlets like television, newspaper, radio and outdoor.

As the world economies went into a lockdown, people increasingly took to internet causing global digital penetration to rise by almost 23% since March 2020. Naturally, one would assume that brands would continue with their digital spends in a scenario when other media for advertising are absent. However, eMarketer forecasts that digital ad revenue by tech giant triopoly – Google, Facebook and Amazon – is not going to be as great as in the past few years.

The new eMarketer data was released by The Wall Street Journal on 22nd June. According to the report, Google’s advertising revenue will decline for the first time ever in 2020. Facebook and Amazon will see growth, however, not even close to the one in previous years. The overall ad market is expected to reach $134.66 billion, an expansion by 1.7% from 2019.

The Alphabet unit – Google – is expected to have digital ad sales of $39.58 billion in 2020, down by 5.3% from the previous year. Consequently, Google’s digital ad market share is also expected to decline to 29.4%, from 31.6% last year.

On the other hand, Facebook is projected to lock in $31.43 billion in ad revenue in 2020, up by 4.9%, and an increase in its market share to 23.4%, from 22.7% last year. Likewise, Amazon’s ad revenue is projected at $12.75 billion, up 23.5% in 2020, with a market share of 9.5%, up from 7.8% as in 2019.

The declining ad revenue of Google is a result of heavy pullbacks from the travel sector. Ad spends by hospitality, entertainment and food industry have been almost negligible due to travel restrictions and social distancing norms placed by governments.

Further, Amazon also pulled its ad spends from Google at the beginning of the lockdown as it struggled to meet consumer demands amid crisis. Even though e-commerce has risen during the past few months, the growth has only been seen in the essential categories which have also wrestled to keep up with consumer demands under restrictive conditions for business operations.

The report, however, projects a strong bounce back in the post-pandemic scenario. Ad volume is projected to grow by 20.9% in 2021 reaching $47.85 billion. It will reach $53.47 billion in 2022, further expanding by almost 11.8%.