During an interview with Wall Street Journal at this year’s Cannes film festival in France, Tim Armstrong, the chief executive officer of AOL admitted that everyone in the industry is afraid of Google and Facebook. Namely, the two tech giants are absolutely dominating the online advertising market and have been doing so for years which naturally isn’t something their competition is fine with. As of right now, Google and Facebook’s operations account for 43% of ad revenue worldwide, eMarketer reports.
As Armstrong explained, the fear of a Google/Facebook advertising duopoly is present among “publishers, advertising agencies, marketers,” and everyone else working in the industry who isn’t getting paid by one of these two tech giants. Both advertising giants are commonly referred to as “walled gardens” because they not only dominate the market but also restrict or inhibit the usage of other marketers’ own data and third-party analytics tools in order to further their dominance. Kathy Leake, CEO of an advertising company Qualia has also recently shared Armstrong’s concerns by stating that “the big [advertising] guys get bigger, gobbling up the data, while the marketers come away with nothing.” However, Armstrong sees this situation as on opportunity for his own company to offer an alternative that’s different from what the market leaders are providing. As he explained, AOL is looking to provide an advertising service which functions in a more open manner and will enable sharing data with AOL’s partners and customers. This would potentially be rather beneficial for AOL’s clients as its data directly relates to mobile devices using Verizon’s network while Google and the rest of competition usually have to rely on smaller snippets of information gathered from their apps and services.
Given how Armstrong is not only the CEO of a Verizon-owned global mass media corporation but was also Google’s chief of sales for almost ten years, he presumably knows what he’s talking about when he says that the advertising industry is concerned with the current market share. On a related note, Armstrong also criticized the online advertising industry for the recent insurgence of ad-blocking software, saying how this phenomenon is the industry’s own fault. On the other hand, he also described the business model of some ad-blocking software which allows advertisers to pay to be allowed through its filter as “unhealthy,” adding that companies which indulge in such practices are “like a wolf in sheep’s clothing.”