Google Loses Share Of Ad Market As Travel Brands Pull Back On Search – AdExchanger

Even Google cant avoid the vicious impact of COVID-19 on the ad industry.

The ad giants net US digital ad revenue will decline by 5.3% this year to $39.6 billion, according to eMarketer, even as it projects the digital ad market as a whole to grow 1.7% to $134.7 billion. As a result, Googles market share will shrink to 29.4%, down from 31.6% last year.

This is the first time Googles ad revenues have declined since eMarketer began forecasting on the platform, said principal analyst Nicole Perrin. Before the pandemic, eMarketer projected 12.9% growth at Google, with its market share shrinking slightly.

We all are aware of the pandemic and how tough its been on the economy, she said, but Google having revenues decline is pretty striking.

The decline will come from search, which makes up roughly 80% of Googles advertising business, as well as programmatic. EMarketer anticipates Googles search revenues will decrease by 7.2%, and programmatic will decline by roughly 5%. Googles search business has been hit hard by a broad pullback from travel advertisers as their businesses shut down due to the pandemic.

[Travel advertisers] had a relatively large share of spend on Google search, Perrin said. Its an important category for Google.

The decline in ad spend exposes Googles over-reliance on travel brands and vice versa to fuel search activity and spend. That will likely change moving forward, as Google focuses on diversifying its offerings into new areas such as cloud and shopping, as well as bringing more direct response ad products to YouTube. YouTube will continue to grow this year, but not enough to counterbalance declines in search.

I would expect Google to continue doing a lot of things they're working on in those areas, Perrin said.

Travel brands, meanwhile, will continue to spend less on customer acquisition and try to diversify spend away from Google as their businesses slowly recover.

Their concern is, are we paying for travelers who wouldve bought from us anyway? Perrin said. Thats a higher strategic question around acquisition marketing.

On Googles coattails

As Google loses share, Facebook and Amazon will continue to gain, albeit at a slower rate than what eMarketer had predicted before the pandemic.

Facebooks ad revenues will grow just 4.9% this year to $31.4 billion, compared to its 21% growth rate in 2019. And Amazons ad revenues will grow 23.5% this year to $12.75 billion, compared to its 39.4% growth rate last year.

Because of this slowdown and Googles overall decline, the triopoly will remain flat this year at 0.2%, its lowest growth rate in a decade.

But unlike Google, Facebook and Amazon will continue increasing their share of the ad market, to 23.4% and 9.5% respectively, up from 22.7% and 7.8% last year.

Facebook isnt necessarily stealing share from Google because their platforms are often used for different objectives, Perrin said.

But Amazons growth is directly impacting Googles search revenues, as people search more for household products under lockdown. Amazons search revenues will grow 25.2% this year to $9.3 billion, growing its market share to 17%. Meanwhile, Googles search market share will drop to 58.5% from 61.3% last year.

The share of search is decreasing for Google and increasing for Amazon pretty quickly, she said. To the extent that people are shopping online more now, it tends to be a lot of the things you would get from Amazon.

But Googles business will likely bounce back by 21% in 2021, depending on the trajectory of the virus, Perrin said.

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Google Loses Share Of Ad Market As Travel Brands Pull Back On Search - AdExchanger