Subscriptions are the big story for reaching and keeping audiences in recent years. More on that in Lightbulb, especially for content creators, in the near future.
Meanwhile, while online advertising may suit some, caution is needed. Being touched for growth by the Google or Facebook god is only one of many marketing mix options for start-ups and established businesses.
Marketing brain and entrepreneur, Scott Galloway wrote this week on digital advertising in his latest newsletter. His assessment is that digital advertising involves:
- vast levels of systemic fraud,
- pseudo transparency in data reporting dashboards,
- society-wide mental health issues, especially for teenagers,
- social and political dystopia, and
- declining commercial efficacy.
Online advertising as a financial model for online businesses has a rocky future.
Galloway concludes “The edifice of digital advertising is unstable and likely to collapse”. He cites data extracted below from his piece.
Data cited by Galloway
- 48% of US advertising in 2020 was digital and Google and Facebook took about 50% of that. Source: i2020 Dentsu data.
- 89% of digital ads may be programmatic. (Do you always trust all algorithms? If you don’t, how do you audit them?)
- 88% of ad clicks may be fake. (Ask: Who benefits?)
- 25% of households-targeted ads hit targets says a Nielsen analysis.
- 65% of location-targeted ads may be wasted says Location Sciences.
- Cookies are disappearing, Google has its own proprietary solution forthcoming. On mobile devices Apple in 2021 introduced a requirement for user permissions.
- “Several large advertisers have made deep cuts in their digital ad budget 8. including Procter & Gamble (cut $200M), JPMorgan Chase (slashed ad reach by 99%), Uber (cut $200M), and eBay (cut $100M) — and seen little or no measurable impact on their business.”
Google and Facebook each have about half of the global market share in digital advertising. In 2020 Google’s market share of global digital advertising was 27.5% according to eMarketer which publishes its graphic below. From a low base of 0.8% in 2016 Amazon rose to 2.9% in 2020. Ahead of it in 2020 were China-based titans Alibaba (8.6%) and Tencent (2.9%).
Looking back, Lightbulb saw ahead
In 2007 when digital advertising was going through perpendicular increases in revenue streams Lightbulb published Online advertising click fraud as well as Advertising is not the only game online. The latter post states: “Since about 1999 there have been broadly three online business models: (1) subscription, (2) fee for service and (3) advertiser-supported. Recognising this, helps monetarise digital media.” In recent years the subscription trend has escalated considerably. It involves the shift from providing software as a product to software as a service by Microsoft (with its Office 365 for example), Adobe (for its suite of over 50 apps), Netflix and providers of elearning, ehealth and numerous other offerings.
Also in 2007 Lightbulb published Advertising revenue is draining overseas. The trend escalated thereafter. It should be of great concern that as reported by the Australian Competition and Consumer Commission an estimated 80% of digital advertising spend goes to the duopoly of Google and Facebook.
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