Greenlighting Of AT&T-Time Warner Predicated On Highly Competitive Tech Space
As noted by the Wall Street Journal’s Alexandra Bruell in “AT&T’s Ambitious Plan To Take On Facebook And Google For Ad Dollars,” AT&T will become a major force in the advertising sector, having the ability to sell more targeted advertisements alongside video content.
Bruell explains that AT&T could show “a young family in New Jersey would see a baby diaper ad while a young single person nearby would see a sports car ad.” This type of advertising “can top $60 [in cost per thousand impressions], compared to an average of $10 for a national ad.”
AT&T is set to acquire more companies to support its ad unit, but the company is not alone among large companies competing in the growing $540B global ad market, of which digital advertising accounts for less than half of all spend.
—Apple has met with a number of companies, including Snap, to participate in an Apple network that would distribute ads across their collective apps.
—Viacom Inc., 21st Century Fox , and Comcast Corp.’s NBCUniversal are developing OpenAP, a similar industry initiative to AT&T’s effort.
—Oracle launched the largest business-to-business audience data marketplace in 2016, noting its ability to provide “access to more than $3 trillion in consumer transaction data, two billion global consumer profiles, and 1,500+ data partners.”
#2 Digital competes with TV and offline advertising for marketing dollars
CCIA’s Project DisCo notes advertising competition is fierce and economic research confirms online and offline advertising are substitutes. “What was once a quarterly or monthly re-evaluation of advertising programs has become a weekly and even a daily recalibration of how and where advertisers are reaching their audiences. Economic research confirms that online and offline advertisements substitute for one another. This is consistent with what one would expect to find. As we’ve discussed here on DisCo before, Internet radio does compete with traditional broadcast radio — aggressively so. It would therefore be strange to suggest that advertising on digital radio doesn’t similarly compete with advertising on broadcast radio.” (Matt Schruers, “Infographic: How Ad Dollars Are Spent,” Project DisCo, 1/16/18)
#3 Looking at just online advertising, new entrants and partnerships have brought more competition and Facebook/Google’s lead is expected to decrease.
eMarketer predicts Facebook and Google will lose share of advertising space to new and growing competitors. “eMarketer estimates the two companies will capture a combined 56.8% of US digital ad investment in 2018, down from 58.5% last year…This year, they will garner nearly 48% of new expenditures. By comparison, that figure was nearly 73% in 2016. Let’s take a closer look.” (“Data Suggests Surprising Shift: Duopoly Not All-Powerful,” eMarketer, 3/19/18)
Publishing alliances are using their collective power to pool login data and transform ad buying, as shown by collaboration efforts by News Corp, Axel Springer, and The Guardian — as well as by the online publishers’ association Digital Content Next’s TrustX ad platform. And new entrants like the Vox Media’s Quartz-Concert partnership, “Concert C-Suite,” which takes the ad traffic from Vox and NBCUniversal to create a collective ad inventory, continue to encroach on leading tech services’ share of the digital ad space.