Apple, Facebook, and Google created the modern digital advertising infrastructure.
Now, in many ways, they are destroying it.
The promise of digital advertising is simple and alluring: Companies of any size have the opportunity to get their message in front of consumers. Because each ad is tied to a specific digital property, brands that provide a good experience will succeed. Others will fail.
Of course, all advertising networks make their money on the backs of the majority of users, those who fail to produce any business value from ads. These people subsidize the platform’s “losses” on the tiny minority that optimize their ad management and achieve a significant ROI against their spending.
The deck is stacked from the beginning,
But, at least until now, it has been possible for small businesses to beat the odds and win against the Apple, Facebook, and Google “house.” Those days may be coming to an end. A combination of technical changes and market pressures is snatching digital advertising out of the hands of small businesses.
Let’s take a look at exactly what’s happening and how the big three are contributing to it.
Google’s Titanic Advertising Platform Sets the Tone for All the Rest
Although it has succeeded in diversifying in recent years, the vast majority of money made by Google – and thus by on-paper parent company “Alphabet” – comes through advertising. In 2020, its annual advertising revenue was an astonishing $147 billion.
In short, its advertising network produces one whole Elon Musk in revenue every two years. And that amount is growing: Between 2016 and 2019, it increased by some $70 billion. This represents not only the introduction of more advertisers onto the platform, but the skyrocketing average cost of ads.
Google advertising rates are based on the keyword or phrase that your ad is designed to target. Keywords and phrases that are more competitive generally have a stronger history of commercial activity. Established brands with large budgets are incentivized to push out smaller competitors.
In general, Google advertising prices vary in predictable ways by industry. They can also be subject to some seasonal trends. But small and mid-sized businesses have consistently been squeezed out into smaller and more marginal keywords and phrases – often those associated with far less commercial impact.
As Google has expanded its digital advertising reach, it has naturally created some new opportunities. It bought YouTube in 2006 and has since cultivated it to become the world’s #2 search engine. Video advertising has the potential to reach a new audience and do so compellingly and memorably.
YouTube users are far more likely to take fast action on big-ticket sales items than Google users are. Likewise, even though Google searches illuminate a great deal about what a person is thinking, prospective customers can be targeted even more precisely on YouTube based on their history of video views.
In other areas, however, opportunities are diminishing far faster than they are growing,
Google has long been aware of the nature of its advertising network. Many times, new business registrations are promptly greeted by a coupon for free Google ads. Owners dive in, thinking they can drive targeted traffic to their new venture overnight.
If they aren’t careful, however, they can lose thousands of dollars just as fast.
Because of the complex standards around user experience and technical performance Google has increasingly driven the entire internet to follow, no business is set up to hit the ground running with Google ads. From the very start, every aspect of your website must be set up to make them work.
- Ensuring that the website reflects the latest in data security
- Reducing page load times, especially in times of peak demand
- Ensuring each individual ad leads to a fully optimized landing page
- Providing an excellent mobile experience for phones and tablets
In effect, Google ads should never be a first resort. They should be set up carefully by professionals only once the entire website is complete. Going forward, they need to be monitored and updated, typically several times a week. All these barriers to entry and others will only continue to get higher over time.
Apple’s New Advertising Rules Spell Disaster for Small Advertisers
Apple’s advertising network may not have the name recognition of Google or Facebook among small and mid-sized businesses, especially here in Central Florida. Apple has been actively building out its advertising network since 2020 and has been accused of giving it preferential treatment.
The Apple ad network has generally been confined to applications on Apple-driven devices. However, there are signs that the company’s long-term plan is far more ambitious. Apple Search Ads have been popping up in unexpected places, signaling a potential disruption in the digital advertising ecosystem.
In direct competition with Facebook, Apple Search Ads can now make a convincing case for being the best advertising network for mobile marketers on its home platforms. Apple’s drive to dethrone its key competitor on its own turf has been well known, and analysts predicted this outcome about a year ago.
The reason Apple’s advertising is taking off has nothing to do with the quality of the user experience, the targeting, or even the audience. Yes, about a billion people were using Apple devices in 2019. But one reason the brand is pulling ahead is because of the competitive advantages it has been able to engineer.
Previously, mobile device designers and owners had the opportunity to share the unique device identifiers of their top customers with virtually any other platform, including Google and Facebook. The ability to share this information made it possible to uncover lookalike audiences on other platforms.
In effect, having a successful mobile app meant you were also equipped to pinpoint the 0.01% of users on other platforms who match your ideal customer profile. Apple would not lose business, but it could serve as a sort of “feeder” utility used to optimize your advertising spend elsewhere.
Ultimately, you might save thousands of dollars on your Google and Facebook efforts, preserving more budget for initiatives within your app or elsewhere in the digital universe. It might look like a win-win, but it wasn’t in Apple’s view. Citing privacy, the company made a big change to the feature in October.
Now, it will be opt-in only – which means only a tiny fraction of users will actually activate it.
In fact, only about 20% of people using Apple devices have consented to App Tracking Transparency.
Strangely enough, this move might have the opposite impact of what Apple intended. There is no need for most small businesses to invest in the specialized world of mobile applications if they are not reaping some additional benefits. App monetization alone is rarely a complete business model.
Smaller enterprises could cut out a lot of overhead by rethinking their app efforts.
You might be wondering, then, why Apple considers this an improvement. Its new transparency rules don’t apply to what’s called “first-party” data. First-party data is information shared by your users directly with your company. And who has the most first-party data on Apple customers? Apple.
By locking the vault and keeping this treasure trove of data all to itself, Apple has drawn a line in the sand. Although there are many reasons to support data privacy measures, all is not what it seems here. Instead, Apple is creating a walled garden that clearly enriches it over all other advertisers.
Third-party applications will be allowed to prompt users to accept data sharing – once. And even if your app is brand new on a user’s phone, they may opt out of all third-party transparency notifications, so they will never see one from your application in particular.
Meanwhile, Apple-owned apps will retain the ability to send these prompts at will. There may even be a toggle to provide blanket data sharing permission for Apple apps, while all others need to jump through hoops and go through an onerous process with users.
All this means it will not only be harder to gain attention from mobile users but also harder to save money on your digital advertising across the board. For brands represented within the Apple app marketplace, it is time to completely rethink your commercial goals in the mobile sphere.
Facebook’s Move to Limit Organic Reach Forces More Small Businesses to Pay Higher Rates
In terms of its far-reaching effect on billions of people, Facebook’s algorithm may outpace even Google. Early in its history, it shifted from a chronological approach – where each user would see all messages from the people they follow – to an algorithm-driven design that prioritizes sponsored content.
Since then, Facebook’s News Feed has been accused of creating a filter bubble that leaves many users trapped in partisan echo chambers. Experts increasingly suspect Facebook users are intentionally and repeatedly exposed to content designed to provoke outrage, all to drive clicks and comments.
Even neutral Central Florida businesses are affected by this business model.
When Central Florida small businesses start up their Facebook page, they might be under the impression everyone who followed their page has a chance of seeing their message. In reality, only a tiny fraction of followers have any chance at all of seeing a brand page’s content in their News Feed.
Facebook has said this is to shift the emphasis from brand pages back to family and friends. If so, it’s a goal most users would agree with. In practice, however, there is no evidence that the change has led to a corresponding increase in the quality of connections or discourse on Facebook.
The truth behind the move may be something very different.
Digital marketing researchers have concluded that organic reach – that is, the number of people your content might reach without paying anything to Facebook – has been in free-fall in recent years. The latest figures suggest organic reach on Facebook is around 5.2%.
Out of every 19 out of your hard-earned followers, just one will see your message.
At a time of regulatory scrutiny and real questions about Facebook – including its effect on mental health and the body politic – it is driving businesses to greater dependence on its paid advertising network. Facebook’s advertising revenue rose 56% to $28.6 billion in the second quarter of 2021.
Its overall profit, driven by those increased sales, was up 101%.
The impact of these changes reverberates through your business if you use Facebook in any way. Digital marketing initiatives on the platform will be much less effective if you do not also choose to back them with Facebook ads, which are becoming more expensive with each passing month.
As with Google ads, the price of your Facebook ads depends largely on the type of targeting you plan to perform. If your audience is highly in demand, with many competitors in the field, you will pay more. If you do not have a robust ad budget, these valuable audiences may be all but impossible to reach.
Facebook has continually resisted grassroots pressure from users around the world to offer an ad-free alternative version for a subscription fee. User data is its product. Of all the advertisers on the platform, only a relatively small minority consistently reach ROI through the use of that data.
What’s more, even Facebook’s advertising options are suffused with the assumption that you will work to keep users on Facebook, not encourage them to click away to your website. In effect, you’re paying in time and effort to build your Facebook presence, then paying in funds to make it work for you.
Despite its recent woes, there’s no sign that Facebook will change substantially in its operations, its outlook, or its business model. Facebook advertising may still make sense for small businesses with a defined local geography whose audience is active on the network, but it’s vital to proceed cautiously.
Will Digital Advertising Still Produce Value for Your Business in 2022?
Digital marketing is more than just advertising, of course.
Now more than ever, it’s essential to make sure your digital marketing strategy is holistic. Paid traffic is best used to amplify other initiatives. The long-term benefits of inbound digital marketing can deliver organic traffic far in excess of what you can receive through ad networks.
Digital marketing techniques like professional blog writing and video storytelling gradually develop into lasting competitive advantages. This is because your website becomes more visible and easier to find among users searching for topics relevant to your brand.
This type of digital marketing is a marathon, not a sprint. It continues to yield dividends far into the future as long as you stick with it. By comparison, even the best digital advertising campaign will no longer benefit you the instant you no longer pay for traffic.
Combining these two approaches means you are less reliant on the ever-changing whims of brands like Facebook, Google, and Apple. At the same time, you can use digital advertising in a laser-focused way to channel traffic from large social media platforms to your most effective digital marketing campaigns.
We call it long-haul digital marketing strategy. It means putting the right foundations in place to see consistent results and monthly growth.
It’s Time to Take Your Digital Marketing to the Next Level with a Team That Cares About Your Success
No matter what your plans are for the new year, get advice from a marketing agency you can trust.
At New York Ave, we’ve introduced digital marketing best practices to grow businesses in dozens of industries. Across Central Florida, we’re recognized as modern marketing experts who only recommend things in your best interests – and who prove our results with a commitment to transparency.
Digital marketing is changing. Advertising platforms want you to be satisfied with inconsistent and lackluster results so they can charge you more for every click. We not only help you control your digital advertising costs but also empower you with the strategies that lead to long-term organic traffic.
Your future customers will appreciate it – and you’ll build even better relationships in your community.
Contact us at New York Ave to find out more today. We look forward to helping you soon.