Not so long ago, if you wanted to advertise on the Internet, the obvious choice was Google. At the end of the day, the company’s search engines and services dominated online advertising. However, that might be changing.
Google is no longer what it used to be. According to The Wall Street Journal, an eMarketer study reveals that Google’s share in the advertising segment has been decreasing over the years. In fact, it’s projected that by 2025, the company’s share will drop below 50% for the first time in a decade. While Google remains the top player in this area, advertisers now have more options than ever before.
Amazon is performing very well. Among Google’s competitors, Amazon is the major player in this area, steadily increasing its market share in recent years. It’s estimated to finish the year with a 22.3% share and revenue growth of 17.6%. In comparison, Google is expected to have a 50.5% share and revenue growth of 7.6%. Amazon isn’t only focused on its large e-commerce platform but is also increasingly incorporating advertising into Prime Video.
TikTok. TikTok, the popular social media platform known for its short videos, has begun allowing brands to advertise in the searches carried out by its users. This mirrors Google’s long-standing practices with a key difference: TikTok is particularly appealing to advertisers targeting a younger audience. However, the platform is currently facing challenges due to tensions between the U.S. and China, which may impact its attractiveness to advertisers.
Perplexity. Perplexity is another company showcasing the potential future of online advertising. The startup offers an AI-powered search engine and plans to integrate ads into its AI-generated responses.
Advertising in chatbots. Previously, chatbots like ChatGPT, Claude, and Gemini provided ad-free responses. However, Perplexity’s decision isn’t an isolated case. Google recently announced its plan to introduce ads in Google Lens and AI Overviews. Similarly, Microsoft has also been experimenting with this form of advertising.
Apple also wants a slice of the pie. Even Apple, a company that historically didn’t rely on advertising, has entered this space. In 2022, it started leveraging its large device user base to display ads, leading to a steady increase in ad revenue, particularly on the iPhone. Apple’s recent actions, such as implementing App Tracking Transparency, indicate a clear shift towards reducing advertising for competitors and increasing its own advertising presence. Considering that Apple is gaining ground in this segment, the strategy has been successful.
Image: Quartr
What about Meta? Surprisingly enough, the eMarketer study doesn’t mention Meta, which, in theory, is the second biggest player in the online advertising market. According to Statista, Meta is quite close to Google in terms of revenue share in the U.S. The same seems true at a global level, although there’s a big gap between Google and its competitors, at least for now.
YouTube stands out. Other studies, such as one by the consulting firm Quartr, state that Google and Meta are the top earners in the advertising segment. They also highlight how Amazon is growing remarkably in this space. However, YouTube is particularly noteworthy. In the fourth quarter of 2023, the platform generated $9.2 billion in advertising revenue on its own.
The infamous trial. There’s an ongoing antitrust trial against Google’s advertising division. Prosecutors argue that the company has engaged in anti-competitive practices. What’s more, they say that in online advertising, “All roads lead back to Google.”
Long live having multiple options. The success of some social media platforms is providing advertisers with more options, which is positive news. This increased competition also benefits users to some extent because it compels platforms to develop better ad formats. Users can continue enjoying free services, albeit with ads. However, this may result in an increase in the frequency of ads to sustain these free experiences.
Image | Greg Bulla
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