Recently, an article entitled “Peak Google” lit up Twitter, postulating that the business of search advertising, while not dying, is likely to be surpassed by an adjacent industry -- and soon.
Why? As the author, Ben Thompson, points out, many of the most disruptive events in tech over the last couple decades have been made not by direct competitors, but by “eclipsing” businesses that tipped markets away from the incumbents. Speculating on the next big tech industry shift, Thompson theorizes that money funneled into search giants like Google will soon plateau, while money dedicated to “in-stream” ads will continue to surge.
The reason for this shift? Brands want “immersive content within which to place [their ads],” writes Thompson. I believe brands have found exactly that with social media.
While native advertising’s content innovators like Buzzfeed and Upworthy have been the poster children for native advertising, it’s the social giants who are creating the ecosystem for this coming tipping point.
A quick look at last week’s Q3 earnings reports makes this quite clear. Facebook posted its most profitable quarter in company history, growing ad revenue by 64% YoY to an impressive $3.2 billion. On Twitter and LinkedIn we see similar trends, with YoY ad revenue increasing by 109% and 45%, respectively.
But these platforms are just getting started. While becoming the true front page of the Internet for more and more users, all three of these social behemoths continue to improve their ad product suites rapidly, with great intent. Where other native advertising channels are crawling to make advancements in contextual targeting and campaign reporting to prove ROI, social media is sprinting.
In the last quarter alone, Facebook relaunched Atlas, Twitter began testing a “Buy Now” button, and LinkedIn released a powerful new in-feed ad unit called Direct Sponsored Content -- among dozens of smaller advancements. Show me another native ad channel where campaign precision, scale, and reporting are all being improved at such a rapid pace. In this online arms race for the best social advertising platform, it’s the advertising brands that are actually winning.
As ad dollars devoted to TV and print continue to decline, digital advertising stands to gain across the board. Along with many other business owners, I’m betting that native will make the fastest gains when the largest budgets -- the brand-awareness budgets -- shift to digital. Further, these budgets will be the most evergreen, demanding a steady long-term spend in order to grow deep consumer affinity.
“Peak Google” made waves last week because the author is right. The discrepancy between search and native ad volume will only become more distinct as demand increases, pushing advertisers to consider their options more carefully. Although we have plenty of proof that social is a great channel for direct-response advertising, Google will continue to own the lion’s share of this market -- $50 billion of a projected $545 billion, to be exact. However, when it comes to brand awareness, native will win the day in a battle where search cannot compete.
Search advertising isn’t dying, but it isn’t well positioned for order-of-magnitude innovation. For that matter, neither are most of the other native advertising platforms. And so, an outlier begins to stand out. Maybe search isn’t the only channel being disrupted here? Another shift may soon be on the horizon, one where social out-competes the bulk of the other native platforms to corner the market.I’d Google the latest ad trends to do more research, but I’m sure something useful will come up in my feed soon enough.