For the first time since it began estimating ad revenues at Google, eMarketer is forecasting that the company’s net US digital ad revenues will decline in absolute terms this year. Facebook and Amazon will continue to grow but at severely depressed rates compared with earlier expectations. The triopoly’s size this year will be similar to what it was in 2019 – increasing by $1.6bn (£1.27bn) – but with a somewhat different internal breakdown.
By the end of 2020, Google’s net US digital ad revenues will drop 5.3 per cent to $39.58bn. That brings Google’s share of the US digital ad market to 29.4 per cent, down from 31.6 per cent last year. eMarketer’s Q1 2020 forecast (which did not account for a global pandemic) predicted Google’s US ad revenues would grow 12.9 per cent, but that its market share would still shrink slightly.
“Google has been growing its net US ad revenues at a slower rate than the overall digital ad market since 2016, so this year will continue a trend of Google losing digital ad market share in the US,” said Nicole Perrin, eMarketer Principal Analyst at Insider Intelligence.
Despite downward revisions to both forecasts, Facebook and Amazon will increase their net US ad revenues this year, while the total digital ad market inches up by 1.7 per cent.
Facebook’s net US digital ad revenues will grow by 4.9 per cent to $31.43bn, driven by Instagram’s growth. Facebook’s share of the digital ad market will grow from 22.7 per cent to 23.4 per cent year over year. Amazon’s net US digital ad revenues will jump 23.5 per cent in 2020 to $12.75bn. Its market share will increase from 7.8 per cent to 9.5 per cent. Again, the total US digital ad market will grow 1.7 per cent, to $134.66bn. The triopoly’s share as a whole will gain just 0.2 percentage points from the long tail of the market, the smallest gain in a decade.
“Google's net US ad revenues will decline this year primarily because of a sharp pullback in travel advertiser spending, which in the past has been heavily concentrated on Google's search ad products,” Perrin said. “Travel has been the hardest-hit industry during the pandemic, with the most extreme spending declines of any industry. eCommerce-related ad spending has also been dampened to some extent: Amazon reportedly pulled its ads from Google search earlier this year, as it struggled to meet customer demand for its eCommerce services.”
Google’s US net search ad revenues are expected to decline 7.2 per cent in the US in 2020. Its share of the search ad market is expected to decline from 61.3 per cent to 58.5 per cent (on a net basis) year-on-year, as search advertising on Amazon (which isn't exposed to travel) is still expected to grow robustly this year.
“Search still accounts for the vast majority of Google's net US ad revenues, so even though YouTube will continue to grow this year, it won't be enough to fully counterbalance the more negative trends in search,” Perrin said.