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After ruling the digital advertising space for years, tech giant Google is now eyeing smaller chunks of ad budgets globally. YouTube and Search, long the drivers of the company’s overall performance, have begun to show some weakness of late, industry observers say. The reason, they say, is traders who are exploring new alternatives.
In FY22, Google recorded Rs 24,000 crore in ad revenue from India. This is almost 75% more than the previous year.
This may not be a story anymore. India’s leading advertisers have now started reducing their ad dollars for digital platforms like Google, media planners told e4m.
Paras Mehta, business director of Matterkind, Reprise’s network company, said: “Leading FMCG brands and others are also eager to be present on the platforms where their core TG is, and for that they are more open than ever to the idea of understanding and exploring new possibilities. Many advertisers are now allocating 15-20% of their ad spend as a “Test-Learn-Scale” on platforms outside of the known walled gardens to reach their TG on the “Open Web”. The trend is likely to grow with more and more advertisers following suit.”
Google, Meta, and some other large digital advertising platforms are referred to as “walled gardens.” A walled garden is a closed ecosystem, where the technology provider has complete control over content, ad inventory, ad buying and selling, among other things, thanks to its huge database.
Google, for example, receives nearly 8.5 billion daily searches on its search engine, giving it an 86% market share globally. The majority of ad revenue comes from search and the Display Network.
Large advertisers are seen investing in e-commerce platforms that enable search targeting to targeted consumers. This trend is clear from Flipkart and Amazon India alone which have Rs 7,000 crore in ad revenue.
Pointing out how the number of walled gardens has grown from two to 2,000 over the last few years, Ashish Bhasin, Co-Founder and Chairman, RD&Ks Network, said, “Until a few years ago, Google and Meta enjoyed a complete duopoly in the digital space. Now their market share must be approximately 80 percent. In the last 5-10 years, new platforms like e-commerce brands, LinkedIn and several others have started eating their cake.”
With India’s advertising revenue growing year on year, Walled Garden’s revenue has not been affected in absolute numbers. However, their dominance in digital advertising is being challenged by emerging digital advertising platforms such as Amazon and Flipkart. The trend is visible in international markets where TikTok has emerged as a potential challenger, says Sajal Gupta, CEO of Kiaos Marketing.
It is important to note that Google and Meta’s market share in the US has fallen to 65% and that TikTok is cited as the main reason for the reduction of ad supply in the two walled gardens.
“If TikTok had not been banned in India, the revenues of Google and Meta would have suffered losses in India as well as in the American and European markets,” Gupta believes.
Marketers are generally concerned about inflation, negative market sentiment and global factors such as the Russia-Ukraine war and slowing growth drivers Google and Target. Mass layoffs at Google, Meta and many other tech platforms further point to trouble in the tech sector in the coming days.
Hareesh Tibrewala, joint CEO, Mirum India, says advertisers tightened their commitments in Q3, which impacted digital ad spend overall. “Major brands have cut their digital advertising budgets by about 10 percent and are likely to cut it further in the fourth quarter.” This includes their spending on Google, Meta and other platforms.”
For Shraddha Agarwal, co-founder and CEO of Grapes, the impact won’t be severe. “The industry is talking a lot about the slowdown of Google and Meta affecting the growth of the advertising sector. Well, we could see brands taking away a percentage of their overall marketing budget. But it will not affect the sector phenomenally.”
Some media agencies have not noticed a significant reduction in Google’s ad budget. Kumar Avanish, Chief Development Officer, Cheil India, said, “Google’s DV360 advertising platform is quite robust, simple and cost-effective. Its scale and reach is phenomenal compared to any other platform. There is no question of reducing the Google budget or choosing any other DSP or SSP.”
Multiple platforms
Aside from Google’s DV360, bidding is available from multiple demand-side platforms (DSPs) for bidding on ad inventory. These platforms are Amazon, Walmart, Verizon, Mediamath and Flipkart. AdTech platforms or supply-side platforms (SSPs) that manage the inventory of digital publishers’ websites and apps like PubMatic, Magnite and Hivestack are also available, experts note.
According to Paras Mehta, “The availability of multiple options has prompted media planners to suggest 5-6 available options to advertisers, apart from Google’s DV 360. Some marketers approve 3-4 of them.”
Bhasin agrees: “The entry of programmatic players like Mediamath has increased the ad inventory.”
First-party data
Most advertisers have started investing in first-party data in anticipation of Google deprecating cookies in the next few years.
“This helped them to be agonistic on the activation platform in their approach. Apple and Firefox have already implemented stricter rules regarding third-party audience tracking in browsers and apps,” explains Mehta.
Bhasin agrees: “Advertisers with their own first-party data are becoming walled gardens themselves. Therefore, their dependence on the tech giants has gradually declined to a certain extent.”
He emphasized that there is a need for a “Platform of Platforms” that breaks down silos and enables the integration of advertising technology and marketing technology.
It’s important to note that Google launched the Privacy Sandbox initiative to work with the ecosystem to develop privacy-preserving alternatives to third-party cookies and other forms of cross-location tracking. Trial versions of the Privacy Sandbox API in Chrome have been released for developers to test.
Strengthening SEO
In addition, brands strengthen their own websites with SEO strategies. This should further reduce their dependence on an audience that is only available through the walled gardens. While some of these options are must-haves and some are good-to-haves, it’s important for clients to invest time and money in a solid 1P data strategy, highly robust analytics tools, and attribution models to sustain these efforts for times to come, Mehta explains. .
Awaiting Google’s response
e4m turned to Google to get its perspective and response to the emerging market trend as highlighted by media agencies. The company did not share its comments by the time of publication of the story.
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