As the second half of the calendar year begins, many on Wall Street and Madison Avenue are wondering where advertising revenues will net out for the first half of the year and what the second half of 2020 will be like for the advertising market.
EMarketer recently predicted that in 2020 Google’s US advertising revenue will decline by just over 5% by end of the year. This is the first time, according to eMarketer, since 2008, that Google’s US digital ad revenue will decline. EMarketer had estimated that US ad revenues would grow about 13% before the Covid advertising recession hit. Google’s US market share for search advertising is projected to go down from 61.3% to 58.5% in 2020. Google makes up a huge portion of the total revenue of Alphabet, its parent company. Emarketer predicts that total advertising revenue in the US for 2020 will be $134.7 billion – an increase just under 2%.
These Covid-related headwinds for Google come along at the same time as Facebook is dealing with a boycott of Facebook advertising by numerous companies. Nonetheless, eMarketer still forecasts a small increase for Facebook’s advertising revenue in 2020. Amazon, who has been on a tear in selling advertising, is projected to have in 2020, an increase of 23.5% over their US advertising revenue last year, despite the Covid pandemic.
All of these media companies will have to deal with the constant shifting of the sands in the Internet
advertising landscape. Will Snapchat become a bigger player in the advertising arena? Will TikTok’s US advertising revenue grow at scale enough so that they too
become a bigger player in the advertising marketplace? Will the AVOD (Advertiser-supported, free, video on demand) digital video services eat into TV advertising marketing dollars? Who knows what the next “new thing” will be that will attract consumers’ and their eyeballs? Overtime, it is clear that ad dollars follow consumers’ eyeballs. We will know the actual revenue results for Alphabet and Google when Alphabet reports its second quarter earnings on July 23.
As Mike Kelly, former CEO of The Weather Channel and a long-time executive in the advertising and media world, said to me in an interview, “It is almost inevitable, that as competition increases from all comers, that Google will revert back to something closer to their ‘fair share’ of the ad market. After all these years, search is still their dominant product. As consumer intent and discovery (and attention) shifts to other platforms, so will the advertising dollars.”
On the other hand, another major business model of the Internet – ecommerce – is likely to have a very strong year of growth. Ecommerce is poised to grow 18.0% following a 14.9% gain in 2019 according to eMarketer.
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