What would the advertising landscape look like without Google and Facebook?
With the call to break up the duopoly drawing increasing support, Smart AdServer’s Pierce Cook-Anderson considers the benefits and drawbacks for the digital advertising industry
Global efforts to curb the power of technology giants are gaining momentum. Chair of the US congressional antitrust subcommittee, David Cicilline, has called for public support to push through the most extensive legal reforms for 50 years.
This comes after recommendations by the UK Competition and Markets Authority (CMA) for a new regime of regulation that would limit dominance for major forces, namely Facebook and Google, and similar procedures are in progress in several countries across the globe.
The break-up of big tech companies could therefore become a real possibility. Some would perhaps rejoice at the prospect, but it would also be unnerving for those who depend on the duopoly for digital advertising, with many buyers still considering them the most effective partner right now.
Questions about what would happen if disassembly goes ahead are consequently tinged with uncertainty. Would ad tech suffer, or have the opportunity to create a better and more diverse ecosystem? What would such a huge overhaul of the advertising landscape look like?
Answering those questions isn’t necessarily straightforward.
Ending the duopoly: for better or for worse?
Much of the reason tech moguls have come to the attention of worldwide authorities is their all-pervasive nature. Google and Facebook are tightly woven into the fabric of modern life, so removing them would drastically change how we consume media, send and read messages, make phone calls, and search the internet.
For the ad industry, there would be serious implications for the way online advertising is bought and tracked. It also can’t be ignored that the duopoly provides value for advertisers; enabling brands to meet key performance indicators (KPIs) often hard to achieve outside of the walled gardens.
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But while we don’t want to return to the world of circa 1999, Google in particular has an outsized advantage on the buy and sell sides that isn’t in the interests of publishers or advertisers.
This is demonstrated most clearly by the impending death of third-party cookies – Google’s store of first-party data allows it to continue offering large-scale ad tailoring, while the wider ecosystem scrambles to find alternative solutions. As a result, Google’s current strength will only increase as cookies fade, along with advertiser dependence.
Admittedly, it’s likely Facebook will be difficult to disentangle from ad tech, especially as it isn’t intrinsically involved with ad serving, but splitting out the Google platform could have an enormously positive impact and create more opportunities for different players to thrive.
A new dawn for independent players
One popular theory for what might follow the fall of Google is a return to context. But though this approach may provide a temporary fix, it’s no silver bullet.
In addition to rewinding years of overall progress, reverting to purely aligning ads with content is a step back from the advances real-time bidding (RTB) has made in enhanced efficiency and granular targeting.
Instead, focus should centre on making better use of first-party publisher data. It’s widely acknowledged that brands achieve greater recall, penetration and return on investment (ROI) by working with high-quality publishers to serve ads that reach relevant audiences at the perfect time.
Once Google no longer accounts for the bulk of budgets, there will be scope for buyers and sellers to capitalise on this opportunity at scale by making more direct deals.
Arguably, this could drive benefits for all members of the digital sphere. Not only would premium publishers be adequately rewarded, but we may see a higher standard of advertising as creative campaigns are natively integrated with content.
Better online ads will also boost the user experience, improving attitudes towards digital ads, ad performance, and the publishers that host them.
What about tech providers?
Today’s horizontal ad tech market was created by necessity because there wasn’t previously much room for anything else. In an environment where Google and Facebook don’t control everything, the potential to build diverse vertically-integrated solutions increases.
Obviously, there would be bigger players keen to become the next full-stack conglomerates, but with competition watchdogs keeping a close eye on new end-to-end solutions – and industry players seeking more fair, transparent integrations – the probability they would be allowed to grow unchecked is low.
For those who have long-lived in the shadow of the duopoly, there would now be a possibility to expand into wider areas; digital videos, ad serving, location targeting, data management, and more.
In this way, supply and demand would move closer together, with independent companies providing an array of different options. Provided, of course, they stay focused on introducing tools that genuinely offer transparency, accountability and — most crucially — value, never forgetting that if the industry had prioritised a better value exchange in the first place, it might not have become so reliant on the duopoly.
Monopolies are never good for competition and innovation, and it’s encouraging to see global authorities beginning to recognise their pitfalls. But an immediate break-up isn’t on the cards.
What the industry can be certain of is that, if Google and Facebook are ever dethroned, the industry would be a fairer and more balanced ecosystem. But until that time comes, the duopoly should be encouraged to adopt industry standards and collaborate on an “open” ecosystem.
Energy should also be directed at measures we can adopt to restrict their influence – including direct partnerships and independent advances that will rebuild trust within programmatic trading and improve the ecosystem as a whole.
Pierce Cook-Anderson, country manager UK, Ireland and NL at Smart AdServer