Google ad revenues to dip as market becomes ‘triopoly’ – tracker

WASHINGTON, USA – Google is expected to see its first decline in US ad revenues this year as the coronavirus pandemic hits travel advertising, a market tracker said Monday, June 22. 

New research by eMarketer indicates Google will still be the leading digital advertising but with a smaller share as the market evolves into a “triopoly” with Facebook and Amazon.

Google’s net US digital ad revenues will drop 5.3% to $39.58 billion to bring its market share down to 29.4%, according to the eMarketer forecast which was sharply revised due to the pandemic.

Google’s decline is “primarily because of a sharp pullback in travel advertiser spending, which in the past has been heavily concentrated on Google’s search ad products,” said eMarketer analyst Nicole Perrin.

“Travel has been the hardest-hit industry during the pandemic, with the most extreme spending declines of any industry. E-commerce-related ad spending has also been dampened to some extent: Amazon reportedly pulled its ads from Google search earlier this year as it struggled to meet customer demand for its e-commerce services.”

A big part of the decline will come from “search advertising,” or paid messages deployed by Google when a user enters a search query.

Search ad revenue, in which travel is a major component, is expected to drop by 7.2% in the US, eMarketer said.

Facebook is expected to see growth in its US ad revenues of nearly 5% to $31.43 billion, driven by Instagram, according to the report. That would give Mark Zuckerberg’s firm a 23.4% market share.

Amazon, meanwhile, is extending its strong growth in online advertising with an expected 23.5% rise to $12.75 billion, putting its market share at 9.5%, eMarketer said.

Until recently, analysts had described the digital ad market as a duopoly dominated by Google and Facebook, but Amazon has been rising quickly.

Google has been growing at a slower rate than the overall digital ad market since 2016, ” so this year will continue a trend of Google losing digital ad market share in the US,” Perrin said. – Rappler.com