The Battle of Digital Ads Giants
How long do you stay locking your eyes fix on your smartphone? On average, people spend up to 3 hours and 15 minutes daily on their phones. Millennials devote 5.7 hours per day to their smartphones. Today, digital ads on smartphones are one of the innumerable ways to reach targeted clients alongside TV, billboard, prints, and a whole long list of other ad channels.
“26% of social media users say they tend to buy brands they see advertised”.
Digital-ad scene had been a growing segment that contributes business cycle. This had been the reason why major businesses decided to jump into the impervious industry. For years, digital advertising is dominated by Google in the search ads segment and Meta in social media with an annual ad sales tune of US$210B and US$115B respectively.
The two biggest noises joining the ads bandwagon are Apple and TikTok.
Apple Search Ads
Apple once pledged privacy protection as “the most essential battle of our time.” Apple can no longer just rely on iPhone sales only as the booming smartphone market has been slowing. With that, Apple decided on doubling in size of its ad division. According to Bloomberg News, Todd Terasdi, Apple Ads Unit Vice President – wants to grow Apple’s annual ad revenue from $4 billion to double-digit. The company had structural changes and with some financial outlooks might foresee advertising as Apple’s future key player.
Apple announced their Apple Search Ads designed to drive traffic right to an app via search. It says to connect ads with the relevant target audience in a simple way. Just typing a relevant keyword into the App Store. However, will the automation be limited only to the App Store, or will it be extended beyond that?
Nevertheless, Bank of America analyst, Wamsi Mohan highlighted Apple could generate about $5 billion of advertising revenue from search ads alone in 2022. Bloomberg reported recently that Apple’s ad business had already generated sales of US$4B a year. In continuation of that statement, Research Group Evercore ISI estimates Apple’s ad sales to hit $30B by 2026.
Tik-Tok Distrup the Social Media Playground.
The gen-Z favorite social media, Tik-Tok. In just 5 years since launch, it had managed to shake several platform UI experiences, creator engagement, brand reach, and more. Tik-Tok managed to make Meta’s biggest properties, Facebook and Instagram revamp themselves and apply short-video in their apps.
The changes had been so obvious. Kylie Jenner, the second biggest celebrity on the platform shared on her Instagram story quoted, “Make Instagram Instagram Again. Stop trying to be TikTok, I just want to see cute photos of my friends. Sincerely, Everyone.”
According to the eMarketer forecast – TikTok’s worldwide revenue will exceed US$11b this year and will be double that by 2024.
Recently, Walmart Connect added Tik-Tok and Snapchat as their social media partner to its advertising play.
SnapChat Ads - From Video to Cart.
Snapchat ads are 10-second full-screen vertical videos that show up in between friends’ stories. Just like Instagram stories, users can swipe up to interact with the brand. It can either re-link to a website, watch a longer video, read an article or install an app. Similar to Facebook ads, Snapchat’s advertising platform is self-serve. Anyone can create ads, launch campaigns, monitor performance, and optimize campaigns in the Snap Ads Manager.
It had become the in-line social media ads of choice as according to SnapChat’s internal data 2020, up to75% of millennials and Gen Z uses Snapchat and spends over 30 minutes each day on the platform. Although Snapchat falls back from Instagram in term of audience reach where Snapchat only attract 280 million people while Instagram with over 500 million people daily. The platform niche advertising, cheaper, and less big brand competitors make their advertising options attractive.
YouTube Counter Attack
Google’s best video platform- YouTube also re-inventing and including short-form videos called ‘Shorts’in late 2020 their platform. They take the matter even further by unveiling a new way for revenue sharing for creators after facing intensifying competition from TikTok.
Youtube announced last Tuesday that it will introduce advertising to ‘Shorts’ and give video creators 45% of the revenue. In comparison to its standard distribution of 55% for videos outside of Shorts. The company currently generating US$14.2 billion in YouTube ad sales in their H1 2022, with a 9% increase in the same period in 2021.
Youtube definitely thinks outside of the box with its YouTube premium. When most companies try to include ads in the subscription, YouTube, on the other hand, took that off their choice. So how does YouTube Premium works? It is a monthly subscription service that offers ad-free viewing of all videos, offline playback, and exclusive content.
Facebook Ads vs Meta Ads
It is believed that after Apple’s iOS changes include privacy inducing where includes a pop-up for iPhone users that asks users if advertisers could track them. It is estimated will cost Facebook US$12B to US$14.5 B of ad sales this year.
Did Apple iOS changes trigger a market share shift from Facebook to Google? Even before the changes, Google pays billions of dollars yearly to Apple ensuring to be the default search engine on Apple’s Safari browser. Unlike search advertising, where users “self target” as they’re typing in a search query explaining exactly what they’re interested in at that moment. Changes in iOS limit the ability of Facebook to target users for distribution.
In addition to the turmoil, In June 2022, Sheryl Sandberg, the second executive at Facebook who helped turn its business from a startup to a digital advertising titan, stepped down after being with the company since 2008, four years before Facebook went public. Losing one strong key person had weaken one leg of Facebook advertising.
Facebook Ads might stagnant till their development of Metaverse come to light. Meta Ads are using technology like AR, VR and more to engage audiences and create new business opportunities for clients.
Amazon and Microsoft board on the flight.
Amazon had put advertising as one of its 3 main components after retail and cloud computing. The company is forecasted to take home nearly 7% of worldwide digital-ad revenue this year. Implementing targeted ads of search advertising where users will search on its site. The sponsored items will appear on top of the selection. Their ads mechanism is simple yet effective. In addition to that, Amazon already showing ads on its Prime Video streaming service. Amazon might even launch an ad-supported subscription tier as what Netflix and Disney+ plan to add.
Microsoft on the other hand has a search engine, Bing. The search engine only plays a small share of the search market, but that market potential is huge. Microsoft’s social network, LinkedIn, might only be known as social media for professionals that seem unglamorous. However, its business-to-business ads generate more revenue than some medium-sized networks including Snap’s Snapchat and Twitter.
Unlike Apple, Google and Amazon, Microsoft does not have any Tv or streaming channel, but its latest acquisition of Xandr (an ad-tech company) gives it a loop in serving ads to other streamers. A piece of shocking news even to Microsoft itself, Netflix chose Microsoft to run its forthcoming ad business last July.
Digital advertising plays a major role in business and the trend had yet seemed to slow down. It is not only limited to social media titans but also branching out to retail, search engine, streaming channel, and many other tech sectors. Does digital advertising serve good profit? It certainly does.
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