Spend Money To Make Money: How Big Tech Powers Global Ad Growth

The world’s biggest technology companies have become some of the biggest ad spenders.

Although other global brands continue to grow their ad spend at a moderate rate, they don’t benefit from the same incentives as internet brands, which earn as they spend.

Legacy categories are hampered by an awkward dynamic: Risk losing digital consumers by not spending money with companies that have become their direct competitors.

In WPP’s most recent quarterly earnings report in August, CEO Mark Read noted that the holding company is increasingly looking to big tech brands – think Apple, Google and Instagram – as a source of new business, as large internet firms usurp more classic ad spending sectors like energy and CPG.

AdExchanger examined the ad spend of five of the biggest companies in the world – all in data and technology – and how their media budgets reflect the birth of a new economy.

Alphabet

Alphabet’s advertising has increased by more than $1 billion each of the past two years, reaching $6.4 billion in 2018, according to Zenith Media advertising data.

And the pace isn’t slowing.

Alphabet has early bets on products that require heavy marketing investments to reach scale.

YouTube TV already competes with Amazon Prime, Hulu and Netflix. And Disney, NBCUniversal and WarnerMedia are all expected to launch streaming services by the middle of next year.

The Google Home speaker line, another product on the hunt for scale, gets pushed through Google search and marketing deals with retailers, including Best Buy, Walmart and Target, said Cody Stack, Gartner’s consumer electronics research director.

“You have to keep an eye on Google because they own the search platform that they merchandise products on,” he said.

Google’s music streaming services, Google Play Music and YouTube Premium, feast on YouTube viewers, offering an ad-free subscription alternative when people are listening to songs with ads or watching music videos.

Sometimes Google’s ad tech even tracks its own marketing. A linear TV advertising beta product that launched this year with ad tech partners WideOrbit and clypd emerged from Google’s own data-driven TV planning.

Amazon

Amazon has quickly become one of the world’s largest advertisers. The ecommerce giant eats its own (private label) dog food, spending more on Amazon to promote its smart home devices and homegrown brands than any other company.

But Amazon is aggressively branching into television and digital media.

Amazon quadrupled its digital advertising in the first half of 2019 compared to the same period last year, according to the advertising intelligence company MediaRadar. Amazon’s programmatic campaigns were up by 70%.

Amazon increased its television spend by 28%, while Netflix and Hulu cut TV by 40%.

Although broadcasters have debated whether to accept ads from Amazon, said Brian Wieser, GroupM’s global president of business intelligence, the consensus has been to allow Amazon commercials, despite the threat of an ad-free Amazon Prime. Why? Because rivals like Amazon and Google are bolstering TV ad rates even as viewership declines.

Apple

Apple has produced famous TV commercials going back 25 years. But the aspirational brand has only recently come around on digital marketing tactics.

Apple has the audience and deep pockets to “massively scale” any channel it enters, even if it’s late to the game, Stack said.

Take Apple’s Instagram account, which it launched less than two years ago and already has the third-largest brand community on platform, according to Gartner’s social media tracker.

Apple had no sales or ad spend on Amazon until last November, when it signed a first-party merchant deal and handed over the keys to its Amazon search advertising. In December 2018, Apple’s first full month on Amazon, the company was the second-largest promotional spender on the site, trailing only Amazon itself, according to data from the Amazon advertising and analytics company Downstream.

A filing earlier this year revealed that Apple had bought the digital marketing startup DataTiger. The customer journey-tracking acquisition shows that Apple is embracing digital and data-driven marketing.

Facebook

Facebook has, unsurprisingly, been one of the most effective brands when it comes to leveraging Facebook and Instagram.

But now that the company is trying to get back in the hardware game, with physical products like the Portal home video device, and try its hand at streaming video with Facebook Watch and IGTV, Facebook needs mass advertising, not just savvy mobile marketing, Wieser said.

From 2016 to 2017, Facebook’s ad spend inched up from $310 million to $324 million, according to Zenith’s global advertising report. In 2018, the total jumped to $1.1 billion and is on track to grow again this year, said Zenith head of forecasting Jonathan Barnard.

But Facebook isn’t just stepping up advertising to promote new products. It’s got a few PR and privacy controversies to squelch.

Despite unprecedented spending in the 2018 US mid-year election cycle, the biggest political advertiser on Facebook was … Facebook. The social media network messaged every user on its platform about new political ad policies.

Samsung

Facebook’s biggest advertiser is Facebook, Google spends the most on Google search and Amazon is its own top client – but Samsung, unlike other top tech brands, doesn’t have its own massive media network.

Samsung overcomes this disadvantage with sheer volume. The company passed Procter & Gamble as the world’s biggest advertiser in Ad Age’s annual report last year.

Samsung’s media numbers shot up in part due to crisis management campaigns in 2017 following a smartphone recall.

As an ad spender, Samsung stands out, because it’s “heavily invested in every channel,” said Gartner’s Stack.

Google, Amazon and Facebook hoard search keywords related to their Google Home, Amazon Echo and Facebook Portal smart devices. But Samsung competes in practically every household appliance and consumer technology category. This means it owns thousands of niche keywords.

Samsung is also a pioneer in online shopper marketing.

Other brands and retailers take their cues from Samsung on how to cooperate on search campaigns, Stack said. In that way, Samsung is able to drive traffic to stores without getting into expensive bidding wars with the likes of Best Buy and Walmart.

 

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