TikTok has sprung up, Google and Meta are in a hurry: they are losing their dominance in the digital advertising market

In recent years, with the strong rise of TikTok (overseas version of Douyin) and streaming media, coupled with the overall weakness of the digital advertising industry, Google and Facebook parent company Meta are losing their industry dominance.

Financial Associated Press, January 13 (Editor Xia Junxiong) In recent years, with the strong rise of TikTok (overseas version of Douyin) and streaming media, coupled with the overall weakness of the digital advertising industry, Google and Facebook parent company Meta are losing their industry dominance.

Google and Meta fall below 50% market share for first time in a decade

Research firm Insider Intelligence estimates that Google and Meta combined will account for 48.4% of U.S. digital ad spending in 2022.

Insider Intelligence notes that the combined market share of the two companies in the U.S. has never fallen below 50 percent since 2014, and that figure is expected to drop further to 44.9 percent this year.

Google’s and Meta’s ad businesses, while still growing, are slower than the rest of the U.S. digital ad market, its data show. The agency’s forecasting analyst Zachary Goldner said the decline in market share for the two companies is because brands now have more advertising formats to choose from.

Social media platforms led by Meta have also been impacted by Apple’s change in privacy policy. Apple added the “App Tracking Transparency” function in May 2021. Only when the user actively authorizes the App can track the user’s behavior on the iPhone.

Most iPhone users tend not to authorize, a blow to Meta’s core competency, which has relied heavily on targeted advertising to win over marketers.

Google has been less affected because its search ad business relies on users’ search terms rather than user data collected from apps and web tracking. Google’s share of the U.S. ad market even rose slightly to 28.8 percent last year, but is expected to slip to 26.5 percent this year, Insider said.

Insider’s data also shows that TikTok’s share of the U.S. ad market more than doubled last year, though its overall share remains small, accounting for only 2% of U.S. digital ad spending, a figure that is expected to rise to 2.5% this year.

The industry structure is changing rapidly

The overall weakness in the digital advertising market has also accelerated changes in the industry landscape. Cowen, a market research firm, conducted an annual survey of 50 advertisers in the United States. These advertisers said that they plan to increase ad spending by only 3.3% in 2023 .

Cowen analyst John Blackledge released a report on Wednesday saying that advertisers have adopted a more flexible approach to advertising spending this year, and are more in a wait-and-see mode. It is expected that 2023 will be one of the most volatile years in the advertising market in the past 20 years.

The Cowen report shows that advertisers plan to place more ads on TikTok, Instagram, Amazon and Netflix over the next two years, while reducing their ads on Google Search, Facebook and Twitter.

Up to two-thirds of advertisers said they were extra cautious about their ad budgets this year because of the impact of the recession, inflation and weak consumption.

According to Cowen’s survey, TikTok has the largest increase in digital advertising market share, and the average annual growth rate of short video advertising channels is expected to reach 19% from 2022 to 2027.

Cowen also said streaming giant Netflix ‘s plan to launch a subscription service with lower-priced ad-included packages has attracted huge interest from advertisers. Additionally, advertisers expect Amazon ‘s share of the digital ad market to rise from 6% in 2022 to 7% in 2024.