Amazon Butts in on Google-Facebook “Duopoly” in the Huge Business of Internet Advertising. Publishers Hung Out to Dry

Here are the latest numbers.

Spending on internet advertising in the US jumped 21.8% in 2018 to $107.5 billion, and is up 117% in four years, according to the annual report commissioned by the Interactive Advertising Bureau (IAB) and conducted by PwC. This is the amount that advertisers such as Ford or P&G spent on internet ads in the US. My WOLF STREET media mogul empire is at the far end of this sector, successfully picking up crumbs.

There are two diverging dynamics: Ad spending on laptop/PC platforms (blue columns) has been declining since 2015, as advertising on mobile platforms, such as smartphones and tablets, (red columns) is rocketing higher – from a share of close to zero in 2010 to a share of 65% in 2018:

Internet advertising, at $107.5 billion, accounted for 39% of total advertising dollars of $274 billion spent in the US in 2018. TV, the top dog through 2015, is now in a distant second place with $71 billion and a share of 26%.

Year-over-year, advertising spending declined in the two segments that have been getting crushed for years: “paper” newspapers (-7%) and “paper” magazines (-2.1%). All other media types gained ad dollars, but in only the low single digits, except video-game advertising, which grew by 9.7%. However, internet advertising with a 21.8% growth rate the largest base by far widened the gap rapidly (“OOH” = out-of-home advertising, such as billboards, ads inside public transit, etc.):

And just 10 companies took in 75% of this $107.5 billion, the report says without naming these companies. But we know the top five.

Google, Facebook, and Amazon are the top three, according to eMarketer: Google took a share of 38.2% of all internet advertising revenues in the US in 2018, and Facebook a share of 21.8%. Combined, the “duopoly” hogs 60% of all internet ad dollars in the US.

Amazon is muscling in on them. According to eMarketer, Amazon’s ad venture will grow its revenues by 50% in 2019 and become number 3, with a share of 8.8%.

I have been contacted by Amazon to join its platform for publishers which is competing head-on with Google. Google runs many of the ads you see on WOLF STREET. That Amazon bothered to seek me out and spend time with me, including actual phone calls conducted by real people, though I’m just a little speck, is not only impressive in the Google universe but also shows how aggressively Amazon is going after this. Via testimonials, it said that its deal pays publishers more than Google’s deal, but that remains to be confirmed because we couldn’t work out a deal.

In its Q1 earnings release, Amazon reported that quarterly revenue in its “Other” category – which “primarily includes sales of advertising services…” – was $3.4 billion in the quarter.

Q1 is typically not the strongest advertising quarter in the year – that would be Q4. So by the looks of it, Amazon will likely haul in close to $12 billion in ad revenues in 2019, which would grow its share to 8.8% of total internet ad spending of $129 billion, according to eMarketer estimates. Facebook’s share is expected to remain about stable and Google’s share is expected to shrink by one percentage point. So this is shaping up to be a battle royale.

The other two of the top five recipients of internet advertising dollars, according to eMarketer, in 2018 were:

  • Microsoft and LinkedIn combined, in fourth place, with a share of 4.1%
  • Verizon (AOL, Yahoo, Huffington Post, etc.), in fifth position with a share of 3.4%.

This year, Google, Facebook, and Amazon will take close to 70% of all the money advertisers spend on internet advertising. So what do publishers get? Publishers such as the New York Times and the WOLF STREET media mogul empire?

The advertising universe is divided into three factions:

At one end are the publishers. Like many publishers, WOLF STREET is in the advertising business based on the now classic internet model: The content is free for anyone but you get hammered with ads, on the hope that it balances out for everyone.

At the other end are advertisers – the companies that pay for it all, such as Ford or P&G. They spent $274 billion in the US last year to entice consumers and businesses to buy their products or services. And $107.5 billion of that got spent on internet ads.

Between these two factions is an entire universe teeming with companies that shoehorned themselves between advertiser and publisher to take their bite. This includes various entities of Google, Facebook, and Amazon, the smallest outfits no one has ever heard of, ad agencies representing advertisers, ad agencies representing publishers, thousands of “ad exchanges” (automated systems were bidding takes place in an opaque manner to get ads placed on websites), various opaque layers of “ad tech” companies and other middlemen, and countless scams and assorted nastiness.

Google, Facebook, and Amazon dominate in all three factions with their different roles as they also serve ads to their own users – Google with search, Facebook with its social media platforms, and Amazon with its shopping site that runs ads on every page that shoppers look at.

And the money that advertisers pay filters through these layers, and each layer takes a portion of it along the way. In the end, only a small portion of what the advertiser actually spends for an ad on a website actually goes to the publisher that puts the ad in front of the consumer. And this small portion gets smaller every year, even as the amount spent on internet advertising continues to balloon.

This is a growing complaint among internet publishers that don’t have a subscription model. Even the large and successful ones are now going through cycles of layoffs because the revenues per ad served keep shrinking, eaten up bite by bite by the middle layers, including by the three giants that dominate those layers.

There is a democratic beauty to the ad-supported publishing model: The content is free and anyone has access to the content. In return, readers are served up distracting ads. But all these layers in the middle have destroyed the model for publishers. Many publishers have already switched to subscription models, where much or all of their content is hidden behind paywalls, and readers are still exposed to ads. While this seems like a no-brainer, here is why I rejected that no-brainer. Read…  Why WOLF STREET is Still Free and Not Behind a Paywall Though You Have to Put Up with Ads and I Make (Maybe) Less Money

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  85 comments for “Amazon Butts in on Google-Facebook “Duopoly” in the Huge Business of Internet Advertising. Publishers Hung Out to Dry

  1. Gandalf
    May 14, 2019 at 9:48 am

    Technology has been all about cutting out the middleman and streamlining transactions. Seems like the current situation is ripe for a market disruptor to come along and streamline the whole process.

    All of this could be automated or done online, without a sales force. Advertisers could sign up for this service, specify which sites they want their ads to appear, and websites could specify which types of advertisers they do not want ads from.

    It would just be a single layer market exchange, with the hook being that advertisers pay less and websites earn more.

    Probably the only thing keeping this from happening are the monopolistic practices of the big three. Google for sure has been known to lower the search order of its competitors.

    • May 14, 2019 at 10:16 am

      “All of this could be automated or done online, without a sales force.”

      Well, that is how it has been done for years via algos, servers, in the cloud…. Internet advertising is totally automated. Every ad you see on this site comes through an automated process and ad exchanges and layers of ad tech, and I have no idea what ads you’re seeing. There is no human being involved.

      And the “market disruptors” you’re waiting for have arrived years ago and they now dominate. Their names: Google, Facebook, and Amazon. Plus thousands of ad exchanges, thousands of assorted “ad tech” companies, etc.

      There are thousands of totally automated ad exchanges where the automated bidding takes place. Google has the largest one. And often ads get sold through several ad exchanges automatically by various ad tech companies in fractions of a second before they land on a page on WOLF STREET.

      It’s an amazing technology, actually, when you think about it. Except publishers are no longer in control of what ads run on their sites, or how much they get paid for those ads, if they even get paid.

      • Gandalf
        May 14, 2019 at 10:46 am

        Well then, the large profits kept by Google must be from its monopolistic practices and the lack of competition. Or, the big players could be colluding, as they did with agreeing not to steal each other’s employees, ti keep the profits for themselves. If the ad exchanges are all automated, there’s no reason for the exchanges ti keep the majority of the profits

        It’s been a long time since the last big anti-monopoly case against ATT. It will take the politics of the US to change back more in favor of government intervention again for things to change

        • Gandalf
          May 14, 2019 at 12:44 pm

          And whaddya know? Brett Kavanaugh sided today with the liberals in a 5-4 Supreme Court ruling to allow a class action lawsuit against Apple for monopolistic pricing to proceed.

          There is hope. You should sue the bastards

        • May 14, 2019 at 2:32 pm

          Yes, there are definitely some issues in that department. EU regulators have tried to draw some lines. But when it comes to Silicon Valley, US regulators have all averted their eyes for years.

        • Javert, Chip
          May 14, 2019 at 3:49 pm

          Presumably tech companies discovered the advantages of “political campaign contributions” around the time of the Microsoft anti-trust trial. The reciprocal is politicians discovered a new, lush source of “campaign contributions”.

          The first (actually, only) rule about eating beef is you must milk the cow dry before eating it.

          It is amazing citizens have to pretend corporate campaign contributions are anything but bribes.

        • GrassRanger
          May 14, 2019 at 11:24 pm

          The same thing can be said about a number of areas in the US economy today, especially the medical and pharmaceutical industries.

      • Geo
        May 14, 2019 at 1:19 pm

        Well said. I worked for two years as an “ad buyer” for a modest global ad campaign with traditional media and spent each day calling publishers to negotiate rates we’d pay for ads going back and forth in size (full page, quarter page, eighth page, etc), full color, black & white, placement (front of the publication or back, etc.

        As online advertising entered the market it was similar (top banner, side panels, animated or still, etc). But, as you said, these new means arrived and took the negotiations away from the publishers and put them in the “hands” of algorithms.

        It’s much easier but publishers have no control over their “cut” of the deal anymore. Now, you’re at the whim of Google’s generosity…. similar to being a vendor for Walmart or author on Amazon (I don’t know how much you get for your books but as a filmmaker I get approx $.10 per hour of viewing on my films though they just changed their pay scale so we’ll see what I get in the next quarter).

        It’s democratized the market in ways that allow more people to utilize what we’re once gated markets but it’s also pilphered the vast majority of profit from it into the hands of a select few.

        • alex in san jose AKA digital Detroit
          May 14, 2019 at 8:08 pm

          It takes me over an hour to upload 1 minute of video to YouTube so that’s off limits to me. Craig’s List has died and I don’t have smart phone so I can’t sell on OfferUp or LetGo. I’m under a sort of non-compete clause on Ebay so that’s out too.

          The working method for me has been to go backwards in technology. From trumpet which takes modern brass-bending technology, and regular maintenance, to a simple 5-hole flute.

          Perhaps I will get into making woodcut prints – it was good enough for Escher and Hiroshige – and sell them by the side of the road…

      • c smith
        May 15, 2019 at 1:28 pm

        What about a single advertiser or “underwriter”? Or maybe two or three? I’ve seen other (smallish) publishers do this – Shane Parrish/Farnam Street come to mind. Then you could leave the whole ad network behind?

  2. NARmageddon
    May 14, 2019 at 10:02 am

    It all started when AOL had the awful idea of herding it’s users into its proprietary “channels” known by keywords, rather than letting people experience the wide-open internet that already existed. Then it went downhill form there.

    • DawnsEarlyLight
      May 14, 2019 at 9:02 pm

      In the time of dial-up modems and limited DSL, there were few, if any, resources on the internet, available to consumer retail. AOL may have been proprietary and self dealing, but it started up the beginning vision for many of the coming internet explosion.

      • Otishertz
        May 15, 2019 at 6:07 pm

        Prodigy and compuserve came before AOL just like Myspace before facebook and askJeeves before google. Remember Hotmail? AOL was internet for dummies. When darpanet was bulletin boards you didn’t show up if you were a dummy. The dialogue was different then because of this. Now these usurper quasi govt surveillance fangma companies are doing the same thing as anyone did before but this time herding the whole society into a panopticon honeypot.

        Who is InQtel? Who do they finance and why?

        Buy silicon valley! Get on the mussolini express.

        • otishertz
          May 15, 2019 at 7:32 pm

          How does $107 billion in total ad sales for the industry support the fantastic multiple trillions in combined market cap on these top 5 internet advertiser companies that must share that meager $107B??

        • May 15, 2019 at 9:15 pm

          otishertz,

          Not defending the sky-high valuations here, but that $107 billion was for US internet ad sales only. Google, Facebook, and Amazon are global giants, and US ad revenues are only a portion of their total revenues. Also, for Amazon, US ad revenues are only a tiny portion of its total revenues because it gets most of its revenues from its other operations (retail, AWS, etc.)

        • DawnsEarlyLight
          May 16, 2019 at 12:04 am

          Of course, but they offered nothing in reference to Narmageddons post. Yeah yeah, we all remember the days of the grandfather DarpaNet for nerds, text only BBS’s, CompanyServe, and limited dialog.

          No argument that the current ‘uqgsf’ companies are not doing the same herding that AOL started, but that AOL exposed this to MUCH more of the ‘dummies’/general population.

          Now current electronics communicate directly with these ‘uqgsf’ companies! It’s becoming harder to find anything electronic without an intent to ‘herd us into their honeypot’. Would you have ever believed Alexa would be riding babysitter on all these devices now being sold?

        • DawnsEarlyLight
          May 16, 2019 at 12:46 am

          I do remember when Prodigy switched over to Yahoo! in the early 2000’s. That at first was one big SBC mess! I think I still have an old IBM clone from the early 90’s, with Prodigy (pre WWW) still loaded on it!

  3. JFP
    May 14, 2019 at 10:05 am

    Wolf,
    I’d be very leery of Amazon’s claim that they “pay more.” What really drives publisher revenue is not the revenue percentage, but the depth of the demand behind the advertising supplier. Greater demand means higher ad prices, and right now Google has the most demand if you are locked into a single advertising system. Larger publishers can blend demand from multiple to make more money, but that requires sufficient size which you probably don’t have yet. Couple that demand with better targeting data, which in turn drives more demand, and you can see why Google, Facebook and Amazon keep gaining.

    • May 14, 2019 at 10:27 am

      JFP,

      Yes, so I use three ad agencies. Two of them are mostly ad tech companies, and all three of them use other ad tech companies to make their systems work; one of them runs on the Google DoubleClick platform. The three provide higher paying ads than Google most of the time. These firms have several dedicated locations on my site, and Google backfills automatically when these ad agencies cannot fill the slot.

      But when readers come to my articles via an Android app such as Google News, Google ads pay relatively well within the Google universe. It appears that Google really knows its Android users and can serve them the appealing high-value ads that actually get clicked on.

      • JFP
        May 14, 2019 at 1:31 pm

        Wolf,

        That’s a better set-up than a lot of the small publishers I see. Full disclosure, I’ve been in internet media for over twenty years, and I make a lot of my living doing Adtech consulting for small and medium-size publishers. If you ever want to discuss anything, let me know. I’d be happy to help you in return for all the enjoyment I’ve received from your books and site.

      • Gandalf
        May 15, 2019 at 11:06 am

        That’s because Google spies on everything you do on their Android phones if you log into one of their accounts and then it tracks everything you surf through or buy in that phone, as well as tracking your GPS location. So it knows how to send the most enticing ads.

        I think it’s possible to turn off all that tracking on an Android phone, but most people just stay automatically logged in (including terrorists and murderers – which has helped law enforcement in the past)

        • Juanfo
          May 15, 2019 at 5:22 pm

          Phones are simultaneously listening and watching us. Perpetually uploading to giant server hangars. What is the reason for all the information? Predict where I’m buying dinner Friday night.

      • c smith
        May 16, 2019 at 9:16 am

        Of course GOOG “really knows” its Android users; their OS is built into the phones, and designed and built to sweep, store and use as much data as possible.

      • Escher
        May 17, 2019 at 10:00 am

        Have always wondered how effective these online ads are, since it should be easy to track their clicks to purchase percentage.
        Over the years I must have clicked on 1-3 ads intentionally. Am I an outlier?

    • May 14, 2019 at 10:31 am

      JFP,

      “I’d be very leery of Amazon’s claim that they “pay more.” ”

      Yes, “leery” doesn’t even describe it. Everyone promises this all the time. I try out different things, and what you see on my site now are the survivors — those that do mostly a pretty good job and actually pay (which is another issue on the internet).

  4. Bobber
    May 14, 2019 at 10:38 am

    It still boggles my mind that people are impulsively clicking ads and buying the shiny things. What are we – monkeys?

    • May 14, 2019 at 10:49 am

      You’ve never met my wife…

    • Howard Fritz
      May 14, 2019 at 10:50 am

      Should I be the one to break it to you?

    • May 14, 2019 at 10:51 am

      Bobber,

      Without consumption, such as buying things or services that we may or may not need to survive, the entire economy would grind to a halt, and there would be no jobs and no retirement and no cars and no internet, and no WOLF STREET and no commenters.

      Nothing in commerce happens until there is a sale. And ads lead to those sales.

      • Gandalf
        May 14, 2019 at 12:50 pm

        Balem Abrasax:
        “Life is an act of consumption, Jupiter. To live is to consume and the human beings on your planet are merely a resource waiting to be converted into capital, and this entire enterprise is just a small part in a vast and beautiful machine defined by evolution, designed to a single purpose: to create profit.”

        • HowNow
          May 15, 2019 at 5:07 am

          All well and good until the end, Gandalf. The only creation on earth that has the “purpose” of “profit” are humans. All the others settle for “reproduction”. Humans engage in reproduction, and some do it at a profit, but “purpose” as “profit” makes no sense. That is, it is not logical. Sounds impressive…

          And for Javert Chip to not recognize that “campaign financing” and political capture by the wealthy and large corporations are an inevitable outcome of “Capitalism” gives me pause. I guess that if you worship some ideal, reason won’t get in the way.

      • wkevinw
        May 14, 2019 at 1:46 pm

        I know in the past of the effectiveness of ads was almost impossible to measure. I guess the www ads can now be tracked through to the % that lead to sales. I’d like know what that number is.

        The other “past” fact/stat is that one of the first areas that get cut (i.e. is very cyclical) is ad spending.

        • Rowen
          May 14, 2019 at 2:03 pm

          I kid you not. FB has a patent based on the idea of listening to your television through your phone microphone to determine whether you watched an advertisement.

          And of course, all the smart TVs are already tracking that.

        • May 14, 2019 at 2:29 pm

          wkevinw,

          The Google ads on my site get clicked on about 0.3% of the time (“click-through ratio”). I have run unique ads for my own clients that got above 1.0% CTR, but that is very high and rare. I have run other ads for my own clients that practically no one clicked on… so around 0%. So this gives you the range.

      • RD Blakeslee
        May 14, 2019 at 2:25 pm

        “Nothing in commerce happens until there is a sale. And ads lead to those sales.”

        A bit of an exaggeration, I think, Wolf

        My trade in cattle, timber and gas leases has involved no advertising at all and I pay no attention to ads. I know what I want and seek it out.

        • Javert, Chip
          May 14, 2019 at 3:59 pm

          Wolf didn’t state ads substituted for sales, but that they facilitate sales.

          The point about “no sale = no commerce” is accurate whether you’ve seen an ad or not.

        • May 14, 2019 at 4:19 pm

          But WAIT A MINUTE… Didn’t you, dear RD Blakeslee, publicly proclaim here on this forum that you buy a lot of stuff on the internet because you live out in the country? If you buy on the internet… you follow ads consciously or subconsciously to the different options that you have. When you go on Amazon, you are practically INSIDE an ad – the whole site IS an ad, and ad blockers cannot block them or there would be nothing on the page!

        • No
          May 14, 2019 at 10:39 pm

          EXACTLY!!!!! I might add I seek it out by finding the seller I can’t exploit the most. There is always someone willing to sell it for less than the other guy. I find the seller not by advertising but by always being willing to buy regardless of if I need it at the moment I find a deal, especially if I can buy for less than the cost of production thereby making the seller take a loss. Retailers are always looking to unload stuff that is taking up space where they want to put new inventory. I also find that employees who just get a minimum wage pay check are often willing to just give you stuff for free by putting it in the bag without charging you for it whether it happens by mistake or on purpose it happens all the time. That’s why I never buy online, way better deals to be had by going to the store/brick and mortar locations managed by the semi retarded troglodytes most minimum wage workers are in this country.

        • RagnarD
          May 15, 2019 at 11:38 am

          Which correlates well with how a rural resident circa 1919 would have used the Sears catalog. The catalog/site was/is the advertisement.

      • noplacetolive
        May 15, 2019 at 1:00 pm

        What has the economy done for you lately?

        • May 15, 2019 at 2:49 pm

          noplacetolive,

          I assume you’re asking me, given that you replied to my comment… It’s a valid question and it made me think — even if that’s not what you had in mind :-]

          So I’ll give your question a shot.

          Look, there were phases in my life when I got kicked around. But “lately” (to use your term), meaning the past 7 years, I built a thriving little business that I work on balls-to-wall every day, often seven days a week, and I’m having a blast, and the business is growing — April was another all-time record month.

          I’m not sure what, if anything, “the economy has done for me lately,” but I know my readers have! They’re coming in larger numbers to my site and they’re reading more of my stuff, which generates more revenues for my little company. Without my readers, there would be nothing. So I thank my readers, and not “the economy.”

          Does that make sense?

    • Joe
      May 14, 2019 at 1:31 pm

      Blaming people about this is not necessarily correct IMO. In the 20th century teams of psychologists were working on figuring out the weaknesses of the human mind, including the subconscious, that can be played for marketing, social engineering (mass manipulation -> propaganda) etc. Science of Persuasion is an example. It does not work on everyone but statistically it works on a lot of people. You can call them monkeys but I personally would not. IMO victim is a more appropriate phrase.

      • RagnarD
        May 15, 2019 at 4:07 pm

        Something works on everybody. I read Sapolsky’s’ “Behave”….we all have a ton of biological biases of which were r not aware.

    • james wordsworth
      May 14, 2019 at 5:04 pm

      I click on all the ads of companies I hate. Easiest way to send them a bill at no cost to me.

      • At
        May 14, 2019 at 10:42 pm

        Genius!

      • Dale
        May 15, 2019 at 4:54 am

        Be careful. The online advertising chain has no trust built into it. In cybersecurity, it is called ‘malvertising’ since an attacker can buy an ad and present you a link to a malicious site. Especially effective as a spear-phishing technique.

        A year or so ago I clicked on a search ad for a product I was already planning to buy, figuring ‘why not’ give the revenue to Google. To my surprise, I was served a popup in Cyrillic. Oops! Never again.

    • alex in san jose AKA digital Detroit
      May 14, 2019 at 8:11 pm

      I click on some of the ads to help Wolf, and also I get ads for Japanese clothing and interestingly the prices have been declining slightly. From $100+ to a little under $100.

      I just bought a little LCR meter on Amazon, I wonder if I’ll see ads for test equipment more on here now? Hey, it was only a little more than $30 and I’ll have it tomorrow. No more mystery coils!

    • Wendy
      May 14, 2019 at 8:55 pm

      It may be more nuanced than just seeing an ad and then clicking on it. Often we see the ad, and it may enter our subconscious, and then at a later time we strangely seek out that product after mulling it over. This mulling may not even operate at a conscious level, and we didn’t click on it initially.

      A similar process happens when we watch a movie preview at a theater. There’s a few snippets of memorable action or cute one liners, and months later, even though the movie may be total crap, we have this vague familiarity of the title and plot (or lack thereof) when the movie is released, and feel it may be worth watching. This does not always work, since back in the day, Tiger Woods was a spokesperson for Buick, and there was no way in hell I would ever consider buying one either then or now.

      • HowNow
        May 15, 2019 at 6:13 am

        Reminds me of a movie preview I saw as a teen: “Sin on the beach”. My friend and I went to see it the following week, expecting provocative stuff. We were surprised to find that some of the sexy “previews” were not even in the movie! Needless to add, as an early porn movie, it would have gotten a “G” rating by today’s standard. (A major film-going disappointment for the two of us)

  5. Howard Fritz
    May 14, 2019 at 11:00 am

    “There is a democratic beauty to the ad-supported publishing model.”

    Democratic indeed Wolf street has become one of my principal time wasters, I mean, the place to be online. Although with the passing of my godson, I’ve decided to return to the office apparently its slim pickings with accountants they all want to work for the big four or Koch. I’ll still be here but less so.

    This does violate the comment etiquette, so I hope I don’t get deleted.

  6. KGC
    May 14, 2019 at 11:14 am

    “hung out to dy” is a great pun…

  7. illumined
    May 14, 2019 at 11:32 am

    If publishers are getting squeezed out then doesn’t that mean sooner or later they either go out of business or switch to a different business model? Wouldn’t that cause a market shakeout since a source of those ad revenues would dry up?

    • May 14, 2019 at 3:52 pm

      illumined,

      Yes, happening, both options – going out of business and switching to a paid subscription model. Not sure about the consequences though for the ad business. The internet is teeming with activity of all kinds.

  8. May 14, 2019 at 12:12 pm

    The AD business remains a method of conspicuous consumption, esp the glossy ads in magazines. We are in a depression and we don’t know it. The ad industry today is like Hollywood in the 30s. Ads are also a form of social realism, they remind you that blacks have kinky hair and hispanics need car insurance but to the degree that you only see what your demographic requires, you aren’t getting that. The US culture police need to step in,, and force people to view a diverse range of ads, including children, who we are told should limit their screen time, (in order to further their sense of entitlement).

    • alex in san jose AKA digital Detroit
      May 15, 2019 at 12:35 am

      Most of us are quite aware that we’re in a depression. It’s hard to forget we’re in one when we used to make $70k or better and are now lucky to make $15k.

  9. Petunia
    May 14, 2019 at 12:45 pm

    This year when my internet and cable package came up for renewal I was ready to cut the cord on cable. I really tried to get rid of it, but the offer for internet and cable was $15 a month cheaper than internet alone. Basically, they are paying me $15 a month to keep cable TV. The only way this makes sense is they need the eyeballs to keep their advertising revenue up or stable.

    The next thing to go will be my cheap fashion magazine subscriptions. I basically only look at the ads to see what’s new in fashionista land. But I find that the online videos posted by other fashionistas offer a better window into what’s new, what’s worth the money, and what’s not worth it. I can already see that the fashion magazine business is dead.

    • May 15, 2019 at 10:58 am

      I love to critique those ads (see McLuhan The Mechanical Bride). I think they serve as a form of propaganda, which operates as positive feedback ( like Sitcoms) The fact they pay you to watch must say something and as such serves as a financially engineered solution to a social problem, much as cheap credit harms savers but it also leads to lower gasoline prices and energy independence in US policy.

      • Petunia
        May 15, 2019 at 2:29 pm

        I saw it mostly as a financial gambit on their part, they pay me to watch and they make advertising revenue from having another subscriber. I had a similar experience many years ago when I cancelled a magazine subscription, they kept sending it anyway to keep their circulation numbers up.

        I wasn’t considering the social or political aspect, but if I’m not watching then they have no hope of reaching me with their social or political propaganda. It warms my heart to know that political campaign money will be paying my cable bill.

  10. Just Some Random Guy
    May 14, 2019 at 1:10 pm

    Does any of it actually work though? I mean does anyone actually click ads?
    I suppose someone must, otherwise nobody would pay for them. I’d like to meet these people. :)

    • Javert, Chip
      May 14, 2019 at 4:06 pm

      Go to almost any political comments section and you’ll find hundreds of presumably home-bound high-school dropouts with no life who post about making $100/hour clicking ads.

      /sarc

    • May 14, 2019 at 4:08 pm

      Yes. This site served 2.9 million Google ads over the past 30 days (not including the non-Google ads). And it generated close to 8,500 clicks, for a click-through ratio of close to 0.3%. IN terms of performance — what people actually buy off those ads — only the vendors would know that. Performance tracking is pretty good these days, and they know what works and what doesn’t.

    • HowNow
      May 15, 2019 at 6:25 am

      At a 0.3% rate of success, you’d think that that would be abysmal failure. So, if your ad get a 0.5% click-through rate, you’re brimming over with joy.

  11. Scott
    May 14, 2019 at 3:45 pm

    This doesn’t even count the amount that Google takes from people who drive to make a living on YouTube or Amazon does from people doing the same on Twitch. And then because so much goes to those companies, they offer the creator subscriptions, of which half goes to Google/YouTube.

  12. Simjam
    May 14, 2019 at 4:58 pm

    I suspect that the NYT, WP, CNN, etc. get healthy subsidies from the Intelligence Community, which has money to burn. What else would explain their slavish adherence to never ending war?

  13. james wordsworth
    May 14, 2019 at 5:07 pm

    The interesting “hidden” mystery is what do people pay per click. I have noticed my cost per click (for ads I place), or at least what Google wants me to pay has moved steadily higher. If I don’t pay (bid) then my ad rank for my web site goes down, and the price goes up even more. I have actually started reducing my ad spend … especially when you look at the search queries (I only advertise on search – best for our product) and see how far they stretch it to get an impression. Lots of time spent building up a lengthy negative key word list.

  14. May 14, 2019 at 5:55 pm

    Wolf:

    Can some banner space on this site be shared between those who spend money for PPC anyway – like James Wordsworth above, myself and others? Not much targeting options of course, but can be tried. No middlemen and an alternative to beer money :)

    • May 14, 2019 at 9:31 pm

      Yes. Contact me by email howlatwolfstreet@gmail.com

      Please note that any new banner replaces a revenue-producing existing banner already in this slot. So the rate has to be competitive. I’d love to discuss this with you.

  15. Mike
    May 14, 2019 at 8:06 pm

    Go with Amazon. Google’s / FB’s advertising technology has become privacy-invasive.

  16. Apeon
    May 14, 2019 at 10:17 pm

    Never buy anything advertised on TV, magazines, newspapers. The internet ads are all stuff I bought, by getting on line and searching.

    must be a whole lot of foolish people out there.

  17. Me
    May 14, 2019 at 10:23 pm

    Just a thought why don’t all companies eliminate their entire advertising budget and pass the savings onto consumers by reducing the cost of everything because they can still maintain their margins perhaps even improve them now that they no longer have these huge useless expenses known as advertising budgets. This will also eliminate the need for adjusting prices and perhaps allow us to impose even greater tariffs to make sure we as Americans do everything we can to cripple the Chinese economy which uses slave labor to build crap no one needs. When was the last time anyone bought anything because they saw or heard an ad other than to notify you that a store was having a going out of business sale, which is the only time shopping retail makes any sense because markups on retail goods are ridiculous relative to the actual cost of production.

    • May 15, 2019 at 12:46 am

      Me,

      You’d be amazed how well advertising works in getting people to buy things they wouldn’t otherwise buy, or to buy things from a different vendor, or to buy a different product. Business people who make the decisions to spend a large amount of money on ads aren’t morons. They’re armed with data. Sure, some ad campaigns fail. But that’s a general risk in business anyway.

      • Me
        May 15, 2019 at 1:07 pm

        Wolf

        I know advertising works that’s the problem. It works on people who have access to credit that shouldn’t. The people who consume based on advertising are the people who pay $100k for a degree in communications, buy homes and cars they can’t afford, take vacations they can’t afford, have children they can’t afford, but crap they can’t afford, etc. That’s my point and the problem with the global economy. We live in a world based on want not need. People have been given access to the ability to consume they never should have been. If we as Americans refuse to buy only what is necessary there would be so much surplus in the world the price of everything would probably be cut in half. The Chinese are the biggest drug dealers the world has ever seen and they make a fortune off morons who never should have been given the credit in the first place. No need for advertising and no need for credit. Buy what you can afford based on your willingness to save for consumption.

  18. Harvey Cotton
    May 15, 2019 at 12:18 am

    Through my cell phone, Google and Facebook know every facet of my life. Google knows where I have been, when, for how long, and how much I spent when there. Facebook knows all of the people I know, what I think, what I feel is important and worth arguing about, my hobbies, interests, and beliefs. And with this mountain of datums, what psychologically manipulative, data-driven advertisements do I get? Little girls’ sketchers. Or Prager U. Or Home Depot D.I.Y. Or a load of other crap I have no need or interest in. The absolute best Google and Facebook do is advertise to me things I have either bought online, or searched Google for. This is the benefit to me of surveillance capitalism.

    • nicko2
      May 15, 2019 at 2:10 am

      A week ago I did some googling for a new airconditioner… a week later, on the few sites that I don’t block ads…the banners are chock full of ads for….. Air conditioners. 😀

      • GK
        May 15, 2019 at 10:02 am

        Well, you never know! You might decide to take up collecting them, as a hobby!

  19. May 15, 2019 at 1:28 am

    Your moderated discussions work, Wolf. This is the ONLY site where I read the discussions. Usually on Amazon Kindle. I’m sure I see more ads in the discussion section. I just tried clicking on an Amazon ad. They are well targeted. Most of the ads are displaying things I have zero interest in.

  20. A. Ferreira
    May 15, 2019 at 2:00 am

    Wolf, once more I urge you take a look at Brave. Their model would increase privacy for users and leave the publisher with more income.

  21. nicko2
    May 15, 2019 at 2:07 am

    For more than a decade, I’ve used firefox loaded with ad and script blocking extensions. IMHO, the money fuelling the Internet revolution is limitless… why should we, lowly citizens (ie. The Product) have to pay for anything? We are past the Rubicon….through the looking Glass… the likes of facebook/amazon/apple pay hardly any taxes, and offshore the majority of profits. On the other side of the coin, we have the upcoming government supported mega Chinese Internet companies. In a world where half a dozen megacorps own everything, why pay anything at all?

    • drg1234
      May 15, 2019 at 10:06 am

      I do the same thing. I also donate to Wolf. The content on this site is worth more than an occasional comment from me.

  22. MC01
    May 15, 2019 at 3:33 am

    I hope Wolf will forgive me for the very slight hijack but as a former (horrible) musician and big music fan I am intrigued in how those statistics are tabbed.
    For example if Mazda or Honda pay to have one of their cars featured in a music video, how is that tabbed? Under “Music”, “Television” or… ?
    What if the video is a YouTube exclusive? Will that be tabbed under “Music” or “Internet”?
    Just very curious.

    Thanks.

    • May 15, 2019 at 9:51 am

      Let’s see if I understood your question correctly…

      It goes by spending and by platform and then by category.

      If Honda pays for a product placement, it is part of Honda’s ad spending and counts as advertising spend, just like an ad.

      If this product placement runs on TV, no matter what show and even if it’s in a music video, this portion counts as ad spending on TV (not internet).

      If the same product placement also runs on a YouTube video, even if it’s the same video than runs on TV, this portion of spending counts as internet ad spend.

      If you see this product placement on YouTube on your laptop, it counts as internet ad spending “PC/laptop”. If you see the same ad on your smartphone, it counts as internet “mobile” ad spending.

      In other words, Honda pays for a package that gets split up in different ways. And Honda tracks it that way.

      However, if a product placement goes viral and Honda didn’t pay for it, it doesn’t count as ad spending because Honda didn’t spend anything. It’s just free advertising. Apple is a master of this. When Apple comes out with a new product, it’s all over the media and social media, and Apple doesn’t pay a dime for this coverage. And since Apple didn’t pay for it, it doesn’t count as ad spending and is not part of these figures.

      By contrast, and separately, “video ads” in this data set are internet ads that show up in your browser on the website that you’re in now as videos; in other words, instead of seeing a banner in a box, you see a video ad in a box.

      • MC01
        May 15, 2019 at 1:21 pm

        Thank you very much for the explanation.
        That makes those $3.3 billion in “Music” look about right.

  23. Shawn
    May 15, 2019 at 3:23 pm

    Outstanding article, one of the best I’ve read on internet marketing. So there are 10 big players currently in this business and Amazon is really shaking things up. One has to wonder what will happen to one trick ponies like Google and especially Facebook if these 10 players become 20 or 50 resulting in asubsequently smaller overal market share over time.

  24. c1ue
    May 18, 2019 at 10:19 am

    I would add that there is some significant amount of fraud embedded in online advertising.
    Proctor and Gamble cut its ad spend 20% – about $1.2B in 2017 and saw no change in outcomes. They furthermore specifically called out bots as one of the reasons for this change.
    This confirms for me that a significant percentage of the $350B to $400B worldwide online ad market is fraudulent. How much? Could be 10% or 50% but likely somewhere in the 30s.
    There are good reasons for this:
    1) Ad agencies are “use it or lose it”. Failure to spend allocated budget means budget cuts next year. I’m not saying the ad agencies indulge directly in fraud, although some certainly do, but that the sector in general is criminogenic due to this structural requirement.
    2) Platform owners gain around 50% of all dollars spend by advertisers. Again. I do not believe they are actively abetting the fraud, but clearly they directly benefit. Hard to really crack down when the outcome is less revenue…
    3) Affiliate marketers. They get a cut on all traffic they refer, but there are multiple channels to create additional referrals including fake traffic, tagging organic traffic as referred, etc.
    This can largely be blamed on the Doubleclick/Google “refinement” of advertising based on target collections of cookies rather than people. Collections of cookies are far easier to fake than extrapolated surveys.

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