Meta and Google’s Dominance Slips

Facing Headwinds

For years, the US digital advertising market has been controlled by two companies: Alphabet (GOOGL), owner of YouTube, and Meta Platforms (META), owner of Facebook and Instagram. However, the duo controlled just 48.4% of digital advertising dollars in 2022, marking the first year since 2014 that these two companies did not command a majority market share.

Apple’s (AAPL) 2021 privacy policy update is one contributing factor. By allowing iPhone users to opt-out of being tracked by apps, Facebook and Instagram can no longer offer advertisers the precisely-targeted ads they once promised.

Google, whose ad-targeting method relies on user search queries rather than app tracking, was relatively unaffected by Apple’s update. But it still faces headwinds, as marketers have started to explore other ways to spend their digital advertising dollars.

Other Ad Contenders

Amazon (AMZN) is the third-largest digital advertiser and is also the world’s largest online retailer. In 2022, the Everything Store controlled nearly 12% of US digital ad spending. Amazon, like Google, is protected from Apple’s policy. User’s purchase and browsing history power Amazon ads.

Another emerging contender is TikTok, owned by Chinese internet company ByteDance. The social media app boasts almost 100 million monthly users in the US, predominantly Gen Z and millennials. While its overall share of the US digital ads market is still just 2%, TikTok is growing at a faster pace than Google or Meta.

Meanwhile, major streaming platforms like Netflix (NFLX) and Disney+ (DIS) combined to control 3.6% of US digital ad spending last year. This suggests that advertisers are exploring new outlets beyond social media companies or search engines.

Going Digital

Even as Google and Facebook’s dominance slips, marketers still show a heavy preference for digital ad channels over traditional ones. In 2023, industry experts expect nearly two-thirds of total US ad spending to go through digital channels.

If you’re an avid scroller, this should serve as a reminder that it’s important to protect your privacy while browsing the web. You can do this by opting out of data tracking, using incognito windows, and refusing to share sensitive data with apps or websites. Remember, if you don’t have to pay to use a product, you probably are the product.

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