July was a month that saw dents to the duopoly, breakthroughs for Amazon & Snap, and online streaming & audio stake their claim for future dominance.
Starting with England football team’s valiant effort in Russia at the start of July; the tournament was a success both on and off the pitch. If you haven’t seen our article looking at brand intent driven by the tournament then check that out here. Otherwise, here are the other main takeaways from July 2018.
Strong month for Google despite a big fine!
Despite the EU hitting Google with a $5bn fine relating to the dominance of its search engine on Android devices and wiping 60% of its profits, Google’s strong Q2 was underlined by a 58% YoY rise in Mobile and Youtube ad CTRs. Ironically; the 26% YoY revenue increase in Q2 was largely down to its strong mobile dominance, a key reason the EU fined them.
Continued scrutiny over its dominance will persist but that doesn’t stop innovation. For instance; Google recently released a host of new ad formats driven by machine learning such as “responsive search ads” that match best performing ads for a specific query; and smart shopping campaigns that optimise performance across goals such as revenue, new customers, driving in-store visits, etc. The launch of ads.txt-only inventory buys and the Measurement Partners scheme also show further commitments to brand safety.
Amazon ecommerce domination and Ad ambitions grow
Amazon now has a reported 49% of US ecommerce – well ahead of eBay’s 6.6% in 2nd place – and 5% of all US retail. Such dominance could see them become top retailer in specific categories e.g. 7.9% share of US apparel sales in 2017. A successful Prime Day will further fuel this where Amazon sold 100m+ products globally, reportedly surpassing last year’s Prime Day, Black Friday and Cyber Monday. According to Adobe, Prime Day also lifted other retailers’ sales – to the tune of 54% for large retailers.
Amazon’s ecommerce domination is no surprise, but Amazon’s ad business is worth $2.2bn – 132% up YoY – and will have 1.2% share of worldwide digital ad market by the end of 2018.
Snapping at the heels
Whilst Snap may not have the same scale & reach as the giants it’s challenging for utility. For instance; they’ve reportedly teamed up with Amazon to introduce visual search features that could challenge Pinterest & Instagram for visual-driven ecommerce revenues. Pinterest themselves are approaching $1bn ad revenue with potential IPO for 2019, with mobile ads, fashion and beauty being key drivers for its 200m+ MAUs.
Pinterest’s Lens visual search feature
Furthermore; Snapchat continues to up the ante on targeting and monetisation as it extended its Nielsen deal to enable brands to purchase inventory across thousands of segments; as well as launching unskippable ads and a PMP to give advertisers and publishers even more control.
By comparison Facebook and Twitter are having slightly tougher times. Facebook lost European users in Q2 though their global reach of 2.5bn users across Facebook, Instagram, WhatsApp and Messenger leaves them in a dominant position. Twitter also lost users in Q2 – 1 m of them – though they reported ad revenues rose 23% YoY to $601m.
Online streaming overtakes pay TV
More people now subscribe to streaming video services than Pay TV in the UK; for instance, Netflix, Amazon and Now TV have a combined 15.4m versus 15.1m for pay TV. Online video is clearly taking over with China leading for video consumption with 105mins per day followed by Russia (102mins) and the UK (101mins) – well above the global average of 67mins. With continued online video consumption growth comes continued ad spend growth too e.g. 20% growth in 2017 to $27bn and will reach $43bn by 2020
Audio to go programmatic
The latest Smart Audio Report from NPR suggests that roughly 43m of the US population own a smart speaker with top activities including ordering food, getting traffic reports and looking up recipes. Publishers are looking at smart speakers as the next hot new platform, adding editorial resources and looking into monetisation. The interest in audio will continue to grow over the next few years as smart speaker adoption hits 100m in 2018 and 225m by 2020, according to Canalys. By 2022 Amazon and Google will be level – at 34% adoption of their respective devices – with Apple trailing massively at 4%. Further evidence of the rise in audio ad interest can be found in the Washington Post’s development of Rhapsocord – a dynamic ad insertion tool for podcasts.
Other key reads
- Data-driven creative for ads are developing with the likes of Bloomberg’s Ad.apt ads that take basic assets and tailors the ad based on browsing history.
- As brand safety continues to be an important issue to overcome, the Brand Safety Institute was launched by the same people responsible for the Trustworthy Accountability Group and Coalition For Better Ads.
- Facebook, Google, Microsoft and Twitter launched the Data Transfer Project to enable easy data transfer between online services for users.