Is Apple profitable to be an ally of Google in the fight for the online advertising market
Does anyone remember that a few years earlier, Google was an unattainable leader in the online advertising market? Now in this market the company is forced to compete with Facebook.
Google and Facebook are the largest players in this market. The share of other companies (Twitter, Yahoo, Pandora) is insignificant, so they can not yet make serious competition to the leaders.
Recently, Facebook has been actively seeking to catch up with a competitor. According to eMarketer estimates , in 2014 Google accounted for 36.9% of the US mobile advertising segment, and 18.5% for Facebook. A year later, their shares were 32.9% and 19.4%, respectively. However, Google will not simply give up its position.
Meanwhile, the market itself continues to grow. In 2015, the volume of the American online advertising market increased by 20.4%. According to PricewaterhouseCoopers and the Interactive Advertising Bureau, advertisers began spending $ 59.6 billion on digital.
35% of their costs were spent on mobile advertising, which is 10% higher than in 2014.
Goldman Sachs analysts say that Google seeks to grow in the online advertising market through a partnership with Apple. Moreover, the companies concluded a deal according to which the Google search engine is now preinstalled in the Safari browser by default.
In 2015, Google’s revenue from mobile search advertising reached $ 11.8 billion. According to Goldman Sachs analysts, the company earned almost $ 9 billion thanks to iPhone and iPad users. Safari provided half that amount. Owners of iOS devices enter requests not only in Safari, but also in the Chrome browser, and in Google’s iOS applications.
For that deal, Google paid Apple $ 1 billion. Considering Apple’s merits, Goldman Sachs analysts believe that Google is ready to pay the apple company even more to preserve this source of income.
How Apple Looks At This Situation
Google gives the partner part of the advertising revenue that iOS devices provide.
On the basis of information that "leaked" from the courtroom during the hearing Oracle-Google dispute, the experts made the conclusion that Apple gets about a third.
More than half of Google’s searches come from mobile devices. Sites that use Google Analytics show the same trend. Over 50% of the audience go online from smartphones and tablets. If the information about Apple’s “rollback” is correct, the latter is unlikely to want to interrupt the collaboration. Unless, this can happen for ideological reasons.
Apple is known to disapprove of many of Google’s actions. Moreover, Steve Jobs, and later, the whole corporation, had his own position on privacy, advertising, marketing and user relations in principle. The current CEO of Apple, Tim Cook, in a public announcement reiterated this position:
“Our business model is very simple: we sell great products. We do not keep dossiers for each user, using his email and web surfing information, and then selling them to advertisers. We do not “monetize” information from your iPhone or iCloud. And we do not read your letters and messages, then to use this information for marketing purposes. Our software products and services are designed to make our devices work better. ”
Speaking about what the company does not, and does not intend to do, Cook had Facebook, Twitter and Google as a "trick". So, the views of Apple and Google on issues of relations with users radically diverge. And in the near future the situation is unlikely to change.
In the future, Apple's position in relation to the advertising industry will become even tougher, TechCrunch experts suggest .
In 2016, advertisers' spending on mobile SEO and PPC will exceed desktop search marketing costs, eMarketer predicts. This suggests that the proportion of Google’s mobile search advertising will depend on Apple even more.
The exact expiration date of the collaboration agreement between Apple and Google is unknown. According to experts, this will happen this year. It was previously reported that Microsoft and Yahoo also claim the default search position in Safari.
According to the forecast of Strategy Analytics, by the end of 2022, the number of mobile video audiences will grow to 2 billion people.
In an attempt to “conquer the world”, advertisers will invest even more in mobile video advertising, trying to reach as many users of smartphones and tablets as possible.
Intermediaries in the process of advertising monetization are increasingly Facebook, Twitter, WeChat and other social networks.
Facebook generates over 8 billion views daily. Representatives of advertising agencies note that the price of YouTube views (recall that this is a Google service) is cheaper than Facebook in 9 out of 10 cases.
However, sometimes advertisers prefer Facebook because of the presence of the target audience. They believe that it will be easier to sell services or products to such users through their channels.
But not everything is as safe as advertisers would like to see.
According to the latest PageFair report, the number of smartphone owners using ad blocking software has grown by 90% over the past year. In total, nearly 420 million users worldwide block ads on smartphones. According to statistics, this is every fifth mobile device on the planet.
Residents of the Asia-Pacific region are actively blocking ads - there blockers are installed on 36% of devices. In India and Indonesia, two-thirds of all smartphone owners use adblock applications. In China, blockers are installed on 159 million devices.