Why the tech duopoly spells even more bad news for traditional media
A view from Andy Pemberton

Why the tech duopoly spells even more bad news for traditional media

Think the ad duopoly of Facebook and Google seems like bad news for traditional media? Well, stick around compadre, because it's about to get a lot worse.

It has been one hell of a week for traditional media. Which week am I talking about? Cynics might suggest it hardly matters – you can stick a pin in a 2018 diary and be pretty confident that wherever it lands you’ve hit an absolute stinker.

As I write, investors at WPP’s annual meeting look set to challenge the board regarding the sudden departure of chief executive Sir Martin Sorrell, whose ad monolith is struggling to cope with digital disruption. In the same week, Amazon announced it has bought the rights to stream 20 Premier League matches, presumably signalling an interest in screening every Premier League match at some point.

Amazon has a habit of eating sectors and their audiences whole. Sporting events were the last brick in the firewall separating broadcast TV and the tech business, so this is clearly a disastrous bit of news for Sky and BT. We are about to see the biggest sporting events leave broadcast TV and go to big tech.

Meanwhile, the ad tech duopoly of Facebook and Google continues to look unstoppable. While total global ad spending is on the increase – up $23bn (£17.1bn) or 4.3% in 2018 – digital ad investment already exceeds spending in traditional TV in 17 markets including the UK and Germany, according to Group M.

Facebook and Google accounted for 84% of online adspend last year, excluding China. Could things get worse for traditional media? Things can always get worse. Other tech companies are now piling on – launching ad businesses to try to eat into that tasty multibillion-dollar advertising pie.

Apple is in talks with Snapchat and Pinterest about participating in an Apple network that would distribute ads across their collective apps, The Wall Street Journal says.

Amazon has reported more than $2bn in mostly digital advertising sales for the first quarter of this year. The retail giant is expected to grow its ad business faster than any other tech company, according to eMarketer.

Microsoft is set to make more than $4bn in advertising revenue in 2018 – that’s more than a quarter of all US newspaper ad revenue. Its growth in ad business is fuelled by the acquisition of LinkedIn and its search site Bing.

Streaming-player manufacturer Roku is building a large software business, driven by advertising revenue.

Business-to-business tech companies Oracle, Adobe and Salesforce are all using cloud technologies to collect data that can be used to target advertising.

Indeed, ad-serving has now become so widespread, any company with an audience can steal ad business away from traditional media companies. US grocer Kroger has an ad business and so does its rival Albertsons; Target and Walmart have media networks.

Taking a note of an industry that has actually come out the other side of digital disruption (the record business with Spotify), publishers have finally realised the only way to beat the competition is to bind together.

Under the Ozone Project, News UK, Telegraph Media Group and Guardian News & Media will pool some of their display ad inventory in a new joint platform.

Quartz, New York Media, PopSugar and Rolling Stone are joining Concert, a digital advertising marketplace operated by Vox Media in conjunction with NBC Universal, to offer marketers cheaper advertising against traditional media content at scale.

News Corp launched a global digital ad network earlier this year called News IQ, which pulls audience data from The Wall Street Journal, New York Post and Barron’s – giving advertisers a way to reach specific audiences around what they call "safe" content.

Will they succeed in combatting the tech giants’ ad dominance? Let’s put it this way: if, in three years’ time, you log into your Amazon Prime account to watch exclusive coverage of the Manchester United vs Chelsea game, you will know the answer was no.

Andy Pemberton is the director of Furthr
@andypemberton

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