Sea Change Happening in Advertising Between Facebook/Meta and Google, Highlighted by Their Recent Earnings
There is a major sea change going on in advertising right now, and you can feel it happening. Two trends have been apparent for some time:
1 - The rise of Amazon for organic and advertising-based product searches over the past 5-7 years, at the expense of Google primarily.
2 - The continued loss of share at Google, particularly to Facebook (especially once they figured out mobile) and to some extent Amazon, along with the idea that there were two types of advertising experiences:
- those in which you didn't know the brand you were looking for [based on borderline creepy accurate user models] (Facebook), and - those in which you went looking for [database of intentions] (Google)
In the past year, there has been a sea change that is becoming clearer.
1 - Facebook is in another one of its occasional "reboot the business" modes as it scrambles to deal with the rise of a new format [to them] (post-iOS IDFA changes).
In their earnings call, they are "rebuilding their ad infrastructure." Seriously Zuckerberg said this. Don't sound simple, but any FB advertiser right now knows what I'm talking about. Targeting and data is hot garbage. Yet ad rates have not declined enough to make up for that reduced experience.
2 - Google is the primary beneficiary, and to some degree other retail ad networks like Amazon and others. Google in particular I believe has a generational opportunity to take retail (and other) ad share back.
More than "what they are doing", it is by and large just "right place, right time" for the search giant.
a. There has been a flight back to traditional PPC from paid social which is easy for advertisers because it is a format they are already familiar with and using. And Google continues to add options for advertisers to spend money. But options need opportunity, which is what we have now. That's why it's different.
Based on their earnings report, Google's retail ad revenue growth in Q4 outpaced all other segments, which highlights advertiser's flight to safety.
b. I think Google's (in particular) and other display networks also have an opportunity to improve and take share -- for those non-intent based searches.
Right now to me, Facebook/Meta seems unfocused and lost. Zuck on the call mentioned "7 major priorities." Really - seven? What transformational leader has ever said that? How can one organization have so many core priorities? If I'm TikTok right now, I am in pure land-grab mode.
Suffice to say, Apple's iOS changes were either terrible timing for Facebook on the heels of a generational increase in ad spend, or a primary reason that motivated Facebook to switch into the metaverse mode in order to change / get ahead of the narrative.
Facebook has a track record of navigating its own disruption, and I think more than anything Zuckerberg hopes that Sheryl Sandberg has yet another rabbit to pull out of her hat.