Much has been made lately of Google’s dominant market position in many areas, not least the obvious one – search, and the one increasingly “powering” the search, both financially and in terms of content ranking – Google’s ad business.
Separating the tech giant’s digital advertising arm has been floated as a political idea in the US, while regulators are preparing to look into Google’s practices in case they find any evidence of monopolistic behavior, said a report from the Wall Street Journal.
This doesn’t seem to be an obvious conclusion from the figures produced by eMarketer and quoted in the article: Google has 37 percent of the $130 billion US market.
But the way this mighty industry functions seems to suggest Google is so well positioned at is every crucial point, that it is able to take “an unreasonably large cut of online ad transactions.” It is also suggested that the company can work to stifle competition by various means, including through bundling and pricing.
WSJ explains how Google uses its vastly dominant search business in the US (80% of the market, more than $116 billion in ad dollar revenue in 2018 alone).
When users search the web using Google, they leave behind keywords – valuable indicators of which search results will rank better, thus make a business or a website perform better. Google auction these to the highest bidder.
If a company wants to place its ads in the search results, it will want to bid for keywords – and the only way to do it is through Google Ads (AdWords). If they win the bid and start advertising in search results, they can, and likely will use another Google tool – Analytics – to learn the metrics of the campaign.
But that’s not all – Google is also the go-to place if a company wants to advertise elsewhere on the web, and the way to do it by using the giant’s Display & Video 360 tool.
And while bids from there can go anywhere ad space is sold – “many go to Google’s own ad exchange, commonly known as AdX, the world’s largest with about half the market share,” writes WSJ.
With so many services and tools at its disposal, Google can afford to link their functionality, bundling them up and lowering the price.
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