One trend that keeps coming up in our coverage over the past decade is the advertising industry’s duopoly (and the degrees to which it’s eroding). Referring to the continued dominance by Google and Meta – including Facebook and Instagram – they account for a commanding share of ad revenue.
Back to the part about erosion, this theme is often invoked in the context of the duopoly’s emerging challengers. And that charge is led so far by Amazon, which continues to chip away at the market shares of Google and Meta, partly fueled by its growing investments in digital advertising and retail media.
To wrap some numbers around this, Amazon’s ad business is growing by about 20 percent every year. Its market share currently stands at about 10 percent, while Google holds a 28 percent market share and Meta has about 20 percent. These percentages represent shares of the total global ad revenue pie.
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Escalating Dominance
But though the top two players are losing share, big-tech collectively continues to grow its ad revenue market share. Specifically, eMarketer recently reported that big tech accounts for 65.6 percent of U.S. ad revenue. That’s notably up from 30.8 percent in 2008, signaling its escalating dominance.
Why is this? Part of it comes down to a classic “rich get richer” dynamic where these players’ size and gravitational pull make them stronger over time. That plays out in several ways, including economies of scale, network effects, and ways to offer advertisers a more attractive value proposition.
That value proposition can include greater reach, given the sheer size of tech giants and their influence. Consider Instagram’s active users, Amazon’s annual page visits, or Apple’s installed base of 2 billion+ global devices. Speaking of Apple, it (like Amazon) is another sleeping giant due to its massive reach.
Unintended Consequences
Another reason behind the growth in ad revenue for many of these tech giants is the p-word: privacy. In the age of privacy reform, one of the biggest success factors comes down to one thing: first-party data. This involves targeting ads by using only the user data you’ve collected on your own domain.
This has served tech giants well simply because of the operational scale of those domains. It allows them to get all the data they need under their own roof. By comparison, smaller players have to rely on ad networks that track users across publishers in order to achieve the equivalent scale of data and insights.
However, that method has lost steam due not only to privacy reform but another factor: the end of the third-party browser cookie. Call it an unintended consequence (though we could have seen this coming), but privacy reform has propelled the ad businesses of the largest players… at least some of them.
