Digital Media’s Rich Getting Richer
If you just look at the headlines life seems pretty good in digital media right now. US Digital ad revenue is expected to be up double digits once the full-year 2018 totals come in (it was +50B just for Jan-July), and mobile advertising by itself has surpassed US TV ad spending. So if you work in the revenue generation side of our industry times must be good, right?
It turns out digital media rev growth isn’t benefiting everyone equally. The problem is that the publisher hierarchy of the “duopoly” is quickly changing into a “triopoly”, thanks to the emergence of Amazon as an ad sales peer to Google and Facebook. As you can see in the eMarketer graphic below, the new three-horse race is forecasted to take in 63% of all digital ad rev in 2020, compared to 62% in 2018. While a 1-point share shift doesn’t seem like much, it basically means most of the growth in the category is flowing to the triopoly, while everyone else in the biz struggles to tread water.
The ramifications of rich publishers getting richer are tangible. As I a posted in early December, several mid-level pubs have found themselves in Digital No Man’s Land, where declining audience and/or ad revenue have forced them to lay off staff or even go out of business altogether.
Remember, this downsizing is happening in a period of immense growth for our industry. Unfortunately, when all the growth in concentrated with a few publishers the rest of the industry suffers.