Alphabet, Meta, and Amazon Dominate Half of the Global Advertising Market

[Photo by AFP Yonhap News]

[Asia Economy Reporter Byunghee Park] According to a report citing GroupM analysis, three major U.S. big tech companies?Alphabet, Meta, and Amazon?have captured more than 50% of the global advertising market excluding China, as reported on the 6th (local time) by major foreign media. GroupM is the media investment subsidiary of WPP, the world's largest advertising company.

According to the advertising market analysis report released by GroupM on the same day, it was confirmed that the influence of big tech companies in the advertising market has increased as the traditional advertising market declined and the digital advertising market grew rapidly due to the COVID-19 pandemic.

The digital advertising market continued its growth trend even last year when most advertising markets shrank due to COVID-19. GroupM estimated that this year's revenue will increase by as much as 30.5%, reaching $491 billion. While other advertising markets such as newspapers, magazines, and movies are shrinking, the market share of digital advertising is steadily expanding.

According to the report, the global advertising market revenue this year, excluding U.S. political advertising, is estimated at $763 billion. This represents a sharp increase compared to last year when the advertising market contracted due to COVID-19, and an 18.7% increase compared to 2019, before the pandemic.

However, as the digital advertising market grows faster, its share of the total advertising market is estimated to reach 64%. In 2014, the digital advertising market share was only about 25%.

When considering only the digital advertising market, GroupM estimated that Alphabet, Meta, and Amazon hold a market share in the 80% range. Brian Wieser, head of corporate intelligence at GroupM, explained, "If the big three tech companies have an 80% share of the digital advertising market, it means their share of the overall advertising market exceeds 50%." The advertising revenue share of these three big tech companies has doubled over the past five years.

Sir Martin Sorrell, founder of WPP, said, "The digital advertising industry is a growth industry, while the traditional advertising market has slowed or stagnated," adding, "This trend will continue." Sir Sorrell also noted, "Large platforms have always dominated the digital market, so it is very natural that the digital advertising market accounts for well over half of the total advertising market."

The decline of the traditional advertising market has been further accelerated by the COVID-19 pandemic.

This year, newspaper and magazine advertising revenue is expected to decrease by 27% compared to 2019. The market share of newspaper and magazine advertising, which approached 15% in 2014, is expected to be just over 4% this year.

Among traditional advertising media, TV performed relatively well. This year, TV advertising revenue is expected to increase by 12% compared to last year, reaching $161 billion, close to the 2019 level.

Movie advertising revenue is expected to plummet by 73% compared to 2019, to $722 million, and outdoor advertising revenue is expected to fall by 13% compared to 2019, to $34 billion.

Wieser said, "The Omicron variant does not seem likely to cause a slowdown in advertising revenue," and predicted that overall advertising market revenue will increase by nearly 10% next year, centered on digital advertising.