Tech Giants Profit From Pandemic As Publisher Ad Spend Plummets

The tech giants’ share of ad spend soared during the coronavirus pandemic while every other media sector, including investors in the content which has kept people informed during the crisis, reported dramatic declines.

Published this morning, the full year ad spend figures for 2020 from AA/Warc show that search grew by 7.1 per cent on 2019 and online display grew by 10.4 per cent. Both categories are mainly controlled by Google and Facebook.

Meanwhile, every other category measured by AA/Warc recorded substantial declines with national news brands down by 24.2 per cent and regional news brands down by 34.7 per cent. Cinema was the hardest hit category, down by 81.7 per cent, followed by out of home, down by 46.3 per cent.   

Reporting on the figures this morning, Press Gazette highlighted the stark difference in trends for regional publisher audiences – which have seen significant growth over the past year – and ad spend, which has declined dramatically over 2020.  

The News Media Association said: “Audiences for trusted journalism have seen significant growth over the course of the coronavirus crisis as people increasingly turn to sources they can trust for important information.  

“Yet, because of the tech platforms’ stranglehold on the digital marketplace, publishers have not seen a commensurate rise in ad revenues. Instead, those revenues have declined dramatically, putting the very future of independent journalism at risk.

“This bizarre and unfair situation cannot be allowed to continue. We urge the Government and the new Digital Markets Unit to act quickly to put the business of producing trusted journalism on a sustainable footing by cracking down on the tech giants’ unfair business practices.”  

The FT reported that Google’s profits had soared during the pandemic as lockdowns kept people at home, watching YouTube videos and clicking on web advertisements served up by the company.

Gross revenue in the first three months of this year rose to $55.3 billion, Alphabet said, up 34 per cent from $41.2 billion and easily outstripping expectations of $51.6 billion. Net profit rose 162 per cent to $17.9 billion, versus a consensus of analysts’ forecasts of $10.5 billion, as calculated by Visible Alpha, the FT reported.

Commenting on the AA/Warc figures, James McDonald, WARC head of data content, said: “The data from 2020 were unlike any we have seen in our 40 years of market monitoring. Save for a flock of online pure-players, the majority of media owners surveyed by WARC experienced their worst trading climate in living memory.

“This was true at both the financial and the human level – many will not witness a full recovery until 2022 at the earliest.”