The digital advertising industry has become a multi-billion industry dominated by a few key tech players. While the industry advertising dollars are also fragmented across several small players and publishers across the web. Most of it is consolidated within brands like Google, YouTube, Facebook, Instagram, Amazon, Bing, Twitter, and Pinterest.
Google and YouTube advertising business models
Google’s advertising revenue growth in 2019 was driven by a change in paid clicks and cost-per-click on Google properties and the change in impressions and cost-per-impression on Google Network Members’.
What are some of the factors affecting Google’s advertising revenues?
• advertiser competition for keywords;
• changes in advertising quality, formats, delivery or policy;
• changes in device mix;
• changes in foreign currency exchange rates;
• fees advertisers are willing to pay based on how they manage their advertising costs;
• traffic growth in emerging markets compared to more mature markets and across various advertising verticals
Google advertising revenues consist of:
• Google Search & other consists of revenues generated on Google search and other Google-owned and operated properties like Gmail, Google Maps, and Google Play;
• YouTube ads consists of revenues generated primarily on YouTube properties;
• Google Network Members’ properties consist of revenues generated primarily on Google Network Members’ properties participating in AdMob, AdSense, and Google Ad Manager.
The growth was primarily driven by interrelated factors including increases in search queries resulting from ongoing growth in user adoption and usage, primarily on mobile devices, continued growth in advertiser activity, and improvements in ad formats and delivery.
Advertising is generated by displaying ad products on Facebook, Instagram, Messenger, and third-party affiliated websites or mobile applications. Marketers pay for ad products either directly or through their relationships with advertising agencies or resellers, based on the number of impressions delivered or the number of actions, such as clicks, taken by users.
- In 2019 increased by $14.86 billion, or 27%, compared to 2018.
- The increase was almost entirely due to an increase in advertising revenue as a result of an increase in the number of ads delivered, partially offset by a slight decrease in the average price per ad.
- In 2019, the number of ads delivered increased by 33%, as compared with approximately 22% in 2018.
- The increase in the ads delivered was driven by an increase in the number and frequency of ads displayed across our products, and an increase in users and their engagement. In 2019, the average price per ad decreased by 5%.
- The decrease in average price per ad was primarily driven by an increasing proportion of the number of ads delivered as Stories ads and in geographies that monetize at lower rates.
Twitter ad platform enables customers to advertise across the mobile ecosystem, both on Twitter’s owned and operated properties as well as off Twitter on third-party publishers’ websites:
- MoPub, a mobile-focused advertising exchange, which combines ad serving, ad network mediation and a real-time bidding exchange.
- Twitter Audience Platform, an advertising offering that enables advertisers to extend their advertising campaigns with Twitter Promoted Products to audiences.
Total revenue for 2019 was approximately $3.46 billion, an increase of 14%, or 15% on a constant currency basis. Advertising revenue grew 14%, or 15% on a constant currency basis, primarily driven by 21% growth in the US.
The search business includes Bing and Microsoft Advertising. Microsoft also has several partnerships with other companies, including Verizon Media Group, through which Microsoft provides and monetizes search queries.
Amazon advertising is directed to sellers, vendors, publishers, and authors, through programs such as sponsored ads, display, and video advertising. Other revenue primarily includes sales of advertising services.
Pinterest offers both brand and performance ads, with performance representing approximately two thirds of Pinterest’s revenue as of 2019.