COVID Consolidation?
Media and advertising dollars see dramatic shift to internet giants during pandemic
As traditional agencies struggle to shoot commercials, execute photo shoots, and produce traditional ads, internet GIANTS like Facebook, Google, and Amazon are usurping this void, all while consumers remain glued to their devices more than ever.
Amazon for example was unusually vocal about the performance of its advertising division (Amazon Media Services) during their last earnings call/disclosure last week.
“It’s been a strong quarter in ad revenue,” Amazon CFO Brian Olsavsky said during the earnings call last week, highlighting that its attribution services are going to become critical for media buyers. “But we did start to see some pull back from advertisers and downward pressure on price … but that was offset by the continued strong traffic we have to the site.”
While net income was down more than $1.1bn over the same quarter last year, Amazon noted a 44% uptick, totalling $3.9bn in the advertising services.
This performance outpaced the services most consumers know Amazon for, like online sales, subscription services and Amazon Web Services.
Amazon has quietly become the third largest media supplier in terms of revenue, only behind Facebook, and Google.
Amazon Media Services are what you’d expect: search, display, custom ads and attribution.
With agency networks lite Denstu, Publicis, WPP struggling to get ads in market, these three pseudo-monopolies stand to gain even more.
If Facebook, Google, and Amazon start hiring agency cast-offs from the traditional media world we could also see a consolidation of talent.
Today, every ad dollar spent sees about .62 cents spent with Facebook and Google. We might see a future where this looks more like .72 cents per ad dollar going to these giants.
What does this mean for marketers?
What does this mean for regulators?
How do traditional agencies respond?
Is it time to break-up these internet giants?
Does Amazon have the reputation and trust factor to grow its media division?
These services would simply be commodities if it weren’t for their complete vertical integration into our daily lives as consumers of media and products.
What do you think about these developments?