Digital Gabe
Cutting Edge Commentary On All Things Media

Digital Media Vendors Turn Spenders

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When it comes to digital media, Google, Amazon, Facebook and other tech high-flyers are the undisputed leaders on the sell side.  The members of FAANG take in an astounding 75%+ of the digital media spending in the US, and then there’s billions more coming in from Apple and Google’s app marketplaces and user subscriptions.

With all this ad rev pouring in it’s easy to swim lane these guys as sellers of ads.  But did you know they’re also becoming some of the top ad buyers too?   According to this AdExchanger analysis, Google, Apple and Facebook are already spending $1B+ in advertising this year, while Amazon is ramping up their ad spend 70% in 2019.

So why are all these digital pubs pouring billions into ad sales?  In a word . . . scale.  Tech companies have driven huge profits over the last decade by amassing hundreds of millions (even billions) of users.  While they’ve figured out how to maximize ARPU (avg revenue per user), they’ve also recognized the key to continued revenue growth is more warm bodies to ARPU up.  That’s where the advertising comes in.

On a very basic level it’s good to see the biggest recipients of digital ad spending practicing what they preach by doing at little advertising of their own.  I’m just waiting to see Tim Cook or Jeff Bezos star in a first-person “message from the CEO” ad!

 

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