The popcorn is lightly caramelized and ready to eat. In the middle of the screen: the future of the main characters of the Internet, Google and Meta, the vast majority of whose income depends on online advertising. This duopoly lost ground in 2022 and now represents just under half of the entire market in the United States. A first for almost ten years. The current inflationary context is the beginning of a response to the setbacks of these giants. But everything suggests that this bad dynamic will continue in 2023… and beyond. Because Google is starting to be shaken up in its core business, the search (search) and hears the dispatcher knocking louder and louder on his door. Meta, on the other hand, is threatened by new privacy considerations. The advertising cake on the Internet, of course, continues to grow: + 10% in 2023 according to Insider Intelligence, but the competition is getting organized. “This is the first time in a very long time that we have witnessed upheavals of this size in our environment”, sums up Alain Lévy, founder of adtech Weborama. Overview of the changes capable of redefining the map of powers on the Web.
1 – Research: is Google untouchable?
Microsoft’s sensational entry into the search, searching the Internet makes Google shudder. Last year, the latter pocketed $162 billion in advertising revenue thanks to its virtual monopoly (about 90% of global searches). That’s more than half of its overall revenue, $282 billion over the last twelve months. Microsoft tumbles with a strong argument: its brand new chatbot Bing-ChatGPT, presented in February, would be more relevant than the traditional Google search. This remains to be proven of course (chatbots have shown many limitations). But tackling the ogre of business offers fantastic prospects. The Satya Nadella-led company estimates that every 1% increase in its market share (currently 3% worldwide) is about $2 billion in additional revenue in its pocket.
Google will not let it go and is developing its own AI-based tools. The company also keeps a good head start by being the default search engine for most computers and smartphones in the world. Microsoft’s battle plan is, finally, unclear. How to monetize AI? Should paid links be included in searches, for example? “But how many will click on these links when they already get a complete response to their request?” asks Laurent Nicolas, CEO of the advertising targeting specialist Implcit. Everything remains to be built. Not monetizing these chatbots would be just as problematic for the industry. Without visibility, the value of advertisements would drop drastically.
2- TikTok, Amazon and Apple are gaining momentum
Much like Microsoft, TikTok thinks it has a say in internet search. His bar search would be used by about 40% of young people. But for now, it is on its social functions that the application is progressing the most. Its advertising revenues, thanks to its short pellets, amount to around 11 billion dollars for 2022 (+ 200% over one year). Its new popularity is weakening the advertising revenues of its competitors Meta (-1% in 2022) and YouTube (-7.8% growth in the fourth quarter of 2022). “Revenues are increasingly fragmented between social networks. For advertisers, campaigns are therefore less and less effective for the same costs”, summarizes Emmanuelle Patry, consultant specialist in social network strategy. Paid subscriptions are emerging at Meta, YouTube and Twitter to compensate for these losses.
The other new online advertising giant is Amazon. Its associated revenues increased by 19% in the last quarter of 2022. The search bars of e-commerce sites are getting better and better. “In France, platforms like Fnac-Darty, Carrefour or even Veepee in France are also interesting for advertisers who are looking for better performance for their campaigns and are therefore closer to the sites where purchases are made”, explains Emmanuel Amiot, partner at within the cabinet Oliver Wyman, author of the last E-pub Observatory. These sites also hold a mass of user data that they are gradually learning to use for brands. The other potential challengers in the field of online advertising are Netflix, Spotify, or even Apple, in the display of advertising on increasingly popular audio and video streaming services. According to Insider Intelligence, these companies should also post double-digit growth in their advertising revenues in the United States in 2023. More tremors are to be expected. “The world of television is also going digital and opening up to data analysis, which will be of great interest to advertisers”, anticipates Laurent Nicolas.
The community is finally watching with attention the monopoly lawsuits launched by the US government against Google – the last date of January. In addition to the search, the Mountain View company has control over many other technological bricks in the sector, such as the advertising server. As such, several colossal fines have also been imposed on it by the European Union (EU) in recent years. “State action is the only one to date that can really knock Google off its pedestal,” judge Laurent Nicolas.
3 – Privacy: the wind of revolution
Third-party cookies – which made it possible to follow Internet users from one site to another and therefore to better identify them – are being phased out. For ethical reasons first. “Targeting, the perfect message at the right time, to the right person, without constraint, met a need that in reality no one was ready to experience”, explains Guilhem Fouetillou, head of Linkfluence. But also experience. “A pair of shoes consulted only once sometimes followed us for three weeks in our web browsing. Which very quickly bored users”, recalls Laurent Nicolas. Europe has spearheaded this movement with the introduction of the GDPR in 2018, then cookie consent banners which have generated nearly a third of refusals. The EU is very offensive on the subject. Witness the heavy fine imposed at the end of last year on Meta (390 million euros) for this same lack of consent to targeted advertising.
Large companies are called upon to adapt. In its Safari browser, Apple has abandoned these third-party cookies. Its App Tracking Transparency (ATT), introduced two years ago, allows all iPhone users to choose which apps can track them. This program has cut Meta revenue by $10 billion to $13 billion in 2022. Google, meanwhile, is showing signs of feverishness: it has twice postponed the abandonment of third-party cookies on Chrome (the company is now aiming mid-2024). Observers are dubious about the emergence of equally precise equivalents for advertisers. “They won’t make it,” stings Alain Lévy. The French Criteo has also given up. This French flagship, listed on the Nasdaq, is pivoting its model, which was originally centered on the use of these third-party cookies. Meta and Google retain the right to use the cookies they own (first-party cookies). What, if their number of users continues to grow, to stay one step ahead of advertisers.
Despite everything, the market is opening up to new ways of doing things. A coalition of large telecom companies, Vodafone, Deutsche Telekom, Telefonica and the French Orange announced in February the establishment of an identifier system. Concretely, advertisers would then find a way to trace consumers with their phone number (with their explicit consent). At the same time, the historical contextual advertisements will come back in force. An advertisement for organic food, for example, will mainly be visible on sites that talk about it (or sell it). The value of these advertisements will then be based on knowledge of websites and their audiences, which will become increasingly detailed. And no longer on that of the users themselves. A real paradigm shift.
Figures :
$282 billion: Google advertising revenue in 2022.
3%: market share of Bing (Microsoft) in research.
+ $10 billion in estimated losses for Meta due to Apple’s App Tracking Transparency.