Google has made huge acquisitions in the past, the company produces smartphones, watches, tablets, Android operating system, it is the biggest search engine in the world, it is experimenting with a full-fledged driverless car, but everyone knows the company gets its big bucks from advertising.
And the latest news in this regard came today when the world’s biggest advertising agency WPP revealed that Google is the company’s biggest media partner.
Chief Executive Officer of WPP, Sir Martin Sorrell said that “Google has become our biggest media partner”. His statement can easily be supported by the amount of its client’s money the advertising agency spends on Google ads. WPP received media bookings worth $75 billion last year, out of which it spent $2.9 billion on Google ads.
This figure is huge; the internet giant reported total revenue of $59 billion last year generated through advertising; the $2.9 billion spent by WPP accounts for 5% of this total amount.
WPP is also using other internet platforms to spend its client’s digital advertising budget; this year alone the company spent $640 million on Facebook, $400 million on Yahoo (wonder why), $150 million on Twitter and $100 million on AOL (really?).
The interesting thing here is that Sorrell used to refer to Google as his “frenemy” mainly because of how it changed the trend of advertising, taking away a huge chunk of advertising market share from conventional advertising agencies.
Google’s intervention has forced advertising agencies to explore new possibilities and marketing strategies using “digital advertising” as a result of which Google started getting the major chunk of its revenue from ads.
However Google has been having troubles of its own as the trend is shifting from desktop to mobile advertising. Google is already feeling the impact of this shift as its market share fluctuated between 2013 and 2014. The company’s biggest competitor at the moment is Facebook.
Last year Google did have the largest share in the revenue that was generated through mobile ads; however the major concern for the company was that its share went down by 6% whereas Facebook reported an increase in share by 2%, which gave the social networking giant a total share of 18%.
Gone is the time when Google was the only valuable ad space in the world, with social networking becoming stronger and strong, the internet giant has to start thinking about distributing its revenue load.
In a way Google and Apple are in the same boat as far as their source of revenue is concerned. Both companies rely heavily on just one “product”, which faces extreme competition from the market. Apple in this regard has to fight off more competitors as compared to Google, but they both have to look for an alternate source of revenue.
Even though Google is not in trouble at the moment, but if Facebook continues to take bigger chunk out of Google’s ad revenue share then the company’s investors and unofficial partner such as WPP will have other options to consider, which may start a very competitive era for Google.