January 25, 2023
Despite Massive Concentration Of Seller Power, Brian Wieser Sees No Change In Control Of Ad Biz
- by Joe Mandese @mp_joemandese, April 11, 2023
While there has been some shuffling among the top players over time (see table below) the world's largest sellers of advertising have increasingly consolidated the share of global ad spending with the top four (Alphabet, Meta, Amazon and Microsoft) now representing more than half the world's ad spending, according to an analysis published Monday by long-time ad industry analyst Brian Wieser.
"One could review this data and come to the conclusion that the biggest platforms are simply too big. I think that’s an over-simplification," Wieser wrote in the latest edition of his Madison and Wall newsletter, noting: "Sure, Alphabet and Meta are around two-thirds of U.S. digital advertising and around 40% of all U.S. advertising during 2022.
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"Add in Amazon and Microsoft and we get to around 80% of all digital advertising and half of all advertising."
Despite that concentration of selling power, Wieser goes on to make the case that actual "control" of the advertising industry hasn't changed all that much over time, assuming you look at it "from the vantage point of an individual advertiser," whom practically speaking, had a limited number of media-buying options to scale their business in 2002 (the baseline for Wieser's analysis) as well as today.
"It’s still only a handful of choices, but the difference now is that it’s the same three choices for every small advertiser regardless of where they are located in much of the world," Wieser explains, adding, "While we can argue that three options are too limiting in either era, at least today’s options are superior because they each operate globally and thus are better aligned with the opportunities that most companies have in front of them.
"In the past, expanding advertising operations to include other territories would have included working with additional geographically constrained media owners who would have been similarly non-competitive. In the present era, a marketer knows that they’ll be able to apply their skills and knowledge from one market to another."
6 comments about "Despite Massive Concentration Of Seller Power, Brian Wieser Sees No Change In Control Of Ad Biz".
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Joe, I'm a little surprised by this one. Here, Brian is combining all types of ad spending together which suggests ---or implies --- that the media sellers are all competing for the same business---when, in fact, it all depends on whether the ad campaign is a branding one or a sales promotional or a direct response effort and whether the advertser is a national media user or a local marketer. It also depends on what form of media the sellers are selling. For example, in 2002 were "GE" ( NBC ) and Viacom competing with Gannett or Bertlesmann? In 2022 did META or Microsoft capture a lot of national TV ad dollars from Comcast ( NBCU) or Disney ( ABC )?
One might argue that it all comes from the same big dollar pot---but it doesn't. Each media seller operates within a well defined competitive set composed of sellers with similar goods for sale. If a media conglomerate owns newspapers, radio sations, TV stations, TV networks/cable channels, magazines, etc. each component hs its own competitive set. These change somewhat from time to time when new media appear---like streaming or social media over the past 20 years. In the case of streaming, it is gradually being integrated with linear TV as both platforms provide the same form of communications. But social media is not as yet competing with national TV ad sellers, though it is stealing some business at the local market level from the stations---mostly small budget advertisers.
As Brian points out, "actual control of the advertising industry hasn't changed all that much over time". And he is right. The huge ad revenues of a very few relatively new sellers----Alphabet, META, Amazon and Microsoft----- are distorting the comparisons in my ever humble opinion.
@Ed Papazian: Look at the green dash (digital) vs. blue dash (TV network owners) share of total ad dollars over time (bottom chart) and it might reveal what's happening with the media mix too.
Joe, I did note that comparison but I have the same problem. The "Network TV" sellers are not playing on the same field as the digital folks and a more appropriate comparison would take only TV ad spend as the base and then slice it up by top ranked TV time sellers. Here I would think that there is quite a lot of big seller concentration. For example a recent Alert report we prepared for our MDI Direct subscribers estimated the degree to which major TV sellers controlled the TV audience---taking linear as well, as streaming into account. We found that the top five TV programmers accounted for 37% of all TV viewing. If we assume that they obtained slightly more than average CPMs this translates into about 40% of the ad dollars. As this is the first time we did this type of analysis I can't give you a figure for ten years ago as a basis of comparison, but I doubt that it would be very much higher.
TOP 10 sellers of advertising, both columns are 2022 so...what is the difference ?
Sorry, I see 2002 - 2022 :(
@Maximillano Diaz Gonzalez: Sorry it's not more clear, but yes, 2002 vs. 2022 -- twenty years apart.