FACEBOOK AND GOOGLE HAVE A PLAN TO CONTROL ALL ADS AND INFORMATION

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Facebook, Google Leading to Internet Domination of Advertising

 by Paul Bond

Sean Gallup/Getty Images

The investment management firm GroupM said Sunday that the dominance of Facebook and Google “is exceedingly bad news for the balance of the digital publisher ecosystem.”

Facebook and Google will capture a phenomenal 84 percent of the digital ad spend worldwide this year as the two online companies account for all of the growth in internet advertising this year, according to GroupM.

The investment management firm said Sunday that the dominance of Facebook and Google “is exceedingly bad news for the balance of the digital publisher ecosystem.” Since the two firms are not only grabbing all the new money advertisers are spending but are also taking share from the competition, GroupM says they will account for “186 percent of digital growth in 2017.”

GroupM’s data strips out China, since media is heavily regulated there and the country is immaterial to both Google and Facebook.

With China, digital advertising will increase overall 11.5 percent this year and will capture 34.1 percent of all spending, while television grows at a mere 0.4 percent, though when state-controlled China is included TV will grow at 3 percent. Worldwide, TV still dominates with 41 percent of ad share.

But in a separate study from Zenith Media also released Sunday, internet advertising has overtaken television on a global basis, accounting for 37.3 percent compared with 34.3 percent. Zenith says that TV peaked in 2012, when it accounted for 39.3 percent of all advertising.

Zenith also says that “the effectiveness of internet advertising has now caught up with digital ad spend,” given its “brand experience” (Zenith’s term it says is an accurate proxy of market share) has hit 35 percent. In 2014, for example, advertisers spent 27 percent of their budgets on the Internet but it only bought them 21 percent of brand experience.

Zenith says the internet’s share of advertising globally will reach 40 percent next year and 44 percent in 2020, when it hits $225 billion in ad spend.

Zenith predicts that overall advertising among all media worldwide will grow 4.1 percent in 2018, reaching $578 billion by the end of that year.

GroupM, though, says advertising will hit $535 billion worldwide this year and $558 billion next year. In the U.S., advertising on the whole will come in at $183 billion this year and $189 billion next year.

By medium in the U.S., TV will grow 3 percent to $81.9 billion in 2018; the internet will grow 10 percent to $62.5 billion; print will shrink nearly 7 percent to $32.3 billion; radio will grow 3 percent to $7.9 billion; outdoor will grow 3 percent to $4.6 billion and cinema advertising will grow 2 percent to $40 million, according to GroupM.

By medium worldwide, TV will grow 2 percent to $217.1 billion in 2018; the internet will grow 11 percent to $202.8 billion; print will shrink 5 percent to $77.9 billion; outdoor will rise 6 percent to $35.1 billion; radio will grow 2 percent to $23.7 billion; and cinema will grow 3 percent to $1.4 billion, according to GroupM.

 

"We believe our information-gathering powers capture them even if they're located offshore because the test is that they ...
"We believe our information-gathering powers capture them even if they're located offshore because the test is that they do business in Australia," ACCC chairman Rod Sims said. Photo: AAP

The inquiry would largely centre on market power and misleading information. While "fake news" would be part of this discussion, it wouldn't be the main focus, he said.

"When you're getting news articles, do you know enough about how they're fashioned for you?" he said.

It would also look at whether advertisers were aware of the full range of information, potentially including how audience metrics and other data were provided.

The impact of the tech giants on the choice and quality of news and journalism available to the public, and long-term trends such as innovation and technological change, would also be looked at, along with information asymmetry, where one company or user has more information than another.

A Facebook spokeswoman said the primary use of the platform was to connect with friends and family, speak to communities of interest and connect with organisations and public figures.

"Whilst the sharing of news and entertainment content is only a small part of the content shared on our services, we take our role in the media ecosystem very seriously and invest significantly in products that support publishers," she said.

"We look forward to a thorough inquiry into the Australian media market." 

The launch of the inquiry is part of the Turnbull government's Broadcast and Content Reform package, whose aim is to help support jobs and media diversity. It was part of a deal with the Nick Xenophon Team to secure its support for the government's media ownership and regulation bill in September.

Mr Xenophon has formerly said Facebook did not move fast enough to remove fake news, and described Google and Facebook as causing a "haemorrhaging" of local media companies.

Earlier in the year, then-senator Xenophon, Sam Dastyari, Scott Ludlam, and Jacqui Lambie backed a Senate inquiry into the future of journalism to examine the structure of newsrooms and tax arrangements and the increase of "fake news".

A key line of the new inquiry will be advertising expenditure in print newspapers, which has been in decline for years as advertisers look for alternative, and often digital, ways to reach audiences.

Concerns about the pressure tech giants put on traditional media and marketing companies was also reflected in Zenith's Advertising Expenditure Forecasts report, released on Monday.

By 2018, internet advertising in Australia was anticipated to account for 50 to 60 per cent of the total advertising spend, Zenith Australia chief executive Nickie Scriven said.

"Google and Facebook are the main benefactors of this growth and this is likely to continue to 2020," she said.

The ACCC is expected to distribute an issues paper outlining matters relevant to the inquiry and calling for public submissions. 

Public and private hearings would then be held in 2018. It hopes to hear from content creators, mainstream and small media operators, platform providers, advertisers, journalists, consumers and small business interest groups.

A preliminary report will be prepared by December 2018, with the final report anticipated by June the following year.

 

Social media platforms and digital content aggregators will be part of the probe.
Social media platforms and digital content aggregators will be part of the probe. Photo: tomeng

"The ACCC goes into this inquiry with an open mind and will study how digital platforms such as Facebook and Google operate to fully understand their influence in Australia," Mr Sims said.

While companies like Facebook and Google were likely to be the biggest focus, he said platforms such as Twitter could also come under the umbrella.

As the companies predominantly operate overseas, obtaining information could prove contentious but he didn't anticipate a legal fight.

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"We believe our information-gathering powers capture them even if they're located offshore because the test is that they do business in Australia," Mr Sims said.

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Facebook, Google and other technology giants' role in spreading fake news stories and diverting advertising away from traditional media will be put under the microscope after the government directed the competition regulator to undertake an inquiry into digital platforms. 

The Australian Competition and Consumer Commission had been asked to scrutinise major digital platforms and their impacts on media, journalism and advertising, ACCC chairman Rod Sims said on Monday.

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