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December 20, 2021 - By Hawke Media

The Rise of the Triopoly and How To Get Your Cut of Digital Ad Spend

Digital continues to increase its portion of the ad-spend pie, as it has for several decades. The tipping point was reached in 2020, when digital ad spending accounted for more than half (54%) of total ad spending, according to Statista. Last year, digital ad spending amounted to $153 billion in the U.S. and $356 billion worldwide.

Digital has increased its share rather quickly. Three years ago, digital advertising accounted for about one-third of all U.S. ad spending, according to GroupM, WPP’s media buying unit — about the same size as newspapers, radio, magazines, and local TV combined. How the mighty have fallen: According to AdExchanger, as of 2020 those combined four categories now share only 21% of U.S. ad spend. 

What was responsible for the dramatic growth of digital ad spending? The answer to this question lies in the fact that the biggest beneficiaries of digital’s growth have been — no surprise — Google, Facebook, and Amazon. According to the Wall Street Journal, these three companies captured 64% of 2020 U.S. digital ad spending. That’s why they are referred to as “the triopoly.”

Let’s look at five reasons why these three companies dominate ad spend in 2021.

1. Familiarity — Daily and on Mobile 

The triopoly delivers eyeballs and clicks: They are still popular with, and widely used by, consumers. 

Google controls a little more than 92% of the global search-engine market, with Bing, its closest competitor, holding just 2.5% of market share, according to Hubspot. Though Google doesn’t share its search-volume data, it is estimated that the company processes approximately 63,000 search queries per second. Clearly, Google dominates search, and therefore paid search

2. Lockdown and Focus on E-commerce

With lockdowns and work-from-home orders dominating much of 2020 and 2021, e-commerce skyrocketed in popularity, out of necessity. This increased the need to spend on advertising in order to make products stand out from the crowd.

Without many people physically visiting stores or commercial spaces, companies and brands saw little value in spending on local print or TV ads. Additionally, the pandemic saw TV networks broadcast much more limited programming, due to COVID shutdowns of production studios and sports arenas. With fewer original shows and no live sports, buying ads online and on popular community (Facebook) or shopping (Amazon) apps rather than on TV networks made more sense.

3. Variety

It’s important to note that the term “digital ad spend” incorporates several different paid advertising products — it’s not one single ad unit or strategy across the board. Digital ad spending is really a catchall term for a range of different paid marketing efforts.

For Google, of course, it’s mostly paid search. However, Google also offers several different advertising products, from its traditional text ads to display ads to preroll and in-stream ads in YouTube.

Facebook offers boosted posts and traditional display ads. Boosted posts can help engage an existing audience, whereas traditional display ads reach new audiences. There is also an “Audience Network” which can advertise on third-party platforms. 

This variation in ad units makes the digital medium much more appealing to advertisers of all sizes.

4. Self-Service

Another reason for the rapid adoption of digital ad spending is that it’s tailor-made for use by individuals and small businesses. Whereas newspapers had streamlined their classified-ad buying over the years into a DIY operation, buying ads in traditional media required dealing with a rep, negotiating rates, and working with a production department. 

Buying ads on Google, Facebook, and Amazon was designed to be handled by individuals with no advertising experience at all. Mistakes can easily be made, of course, and can be costly, but the triopoly built their platforms to make it relatively easy for beginners with less-complex needs to understand how to create and buy ads.

However, as businesses grow, they can accelerate their digital ad spending efforts and hire an agency to help them manage strategy, creative, and spend.

5. Performance, First and Foremost

Finally, if there is one benefit that everyone can agree the triopoly has brought to the table, it is the intense focus on performance, metrics, analytics, and insights.

Just as the triopoly makes it easy for beginners to get their ads published, it also provides performance data to help businesses of all sizes understand ROI. This is critical; without knowledge of performance, people wouldn’t keep spending on ads. In this regard, the triopoly saw a business opportunity in providing performance data, and it works.

“They have done a good job of showing ad performance — and when they show performance, marketers shift dollars,” said Christian Juhl, GroupM’s global chief executive.  

Final thoughts

The triopoly was already asserting its dominance long before the pandemic. A spike in e-commerce and the rapid introduction of digital technologies into people’s home and work lives meant that people were spending even more time than before online and on mobile apps. The triopoly was poised at the right place at the right time.

With DIY platforms that even complete beginners can manage, and the largest global audiences, Google, Facebook, and Amazon dominate for a reason. Incorporating a spend on one or more of these sites or apps should be part of your overall marketing budget. 

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The Drum Digital ad spend accelerates 49% in the first half of 2021 to hit £10.5bn

AdExchanger – Digital Wins, And So Does The Triopoly

Statista – U.S. digital advertising industry – statistics and facts

Wall Street Journal – Google, Facebook and Amazon Gain as Coronavirus Reshapes Ad Spending

Hubspot – 25 Google Search Statistics to Bookmark ASAP