SANTA MONICA, CA – Four companies in the United States this year received 66% of the country’s advertising revenue, data from Interpublic Group’s Magna Global show. Those Big Four – Alphabet’s Google, Meta Platforms, Amazon.com and Bytedance’s TikTok – are pushing other media companies to improve their audience targeting and other performance metrics.
“There are millions of advertisers that buy from these services where they are seeing real customer value be created for their businesses by putting money into those platforms,” Dave Simon, general manager of growth initiatives at digital-ad platform Moloco, said in this interview with Beet.TV contributor Tameka Kee at the Beet Retreat Santa Monica.
“The challenge for the broader industry, which has not historically operated on an outcome basis, is: how are you going to combat the fact that it’s really easy to get ROI [return on investment] using those four services?” he said.
Media outlets that offer a way to identify distinct audiences while still respecting people’s privacy have an advantage against digital rivals who use technologies such as machine learning to deliver ads to the right people at the right time.
The Big Four “know that you’re a logged-in user, and they’re able to understand a lot of information about those users,” Simon said, “but interestingly, the data advantage that they leverage is not nearly as large and vast or differentiated as some of what the other big streamers have.”
The best predicter of an advertisement’s outcome – such as a web visit, mouse click or final sale – is found in the prior 30 minutes of consumer activity.
“The big shift that they’ve made is they don’t set an audience that you’re going to go target. They look at a user and figure out which offer to put in front of that user at that particular moment,” Simon said. “These systems are powered by really sophisticated machine learning that says: here’s an impression for this individual user.”
The popularity of connected devices such as smart TVs and mobile phones is driving changes in the business of delivering advertising through traditional broadcast stations and cable networks. Media companies are diversifying away from these legacy methods of distributing content in response to shifts in consumer behavior.
“We’re moving from a world of measurement to prediction and optimization,” Simon said. “That’s a huge seismic shift, and it’s not something that this industry can do overnight.”
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