The suspicion that Google and Facebook might do well from GDPR was reinforced by Publicis SA, the biggest ad agency after WPP Plc. It said Thursday that second-quarter earnings suffered a 10 million-euro hit because of the new rules. Indeed, the media website Digiday has estimated that overall spending on programmatic ads – digital advertisements that use browsing history to target web users – fell by as much as 40 percent in Europe in the immediate aftermath of GDPR’s May 25 roll-out.
Publicis doesn’t expect its own shortfall to be repeated, but it was telling nonetheless that a senior executive Steve King believes that Google and Facebook’s ad revenue probably increased over the same period.
That might be because, when it comes to the value chain for digital ads, the two companies
can do pretty much all of the important stuff in buying and selling space. They both own:
* An ad exchange (Google’s DoubleClick and Facebook’s Exchange), where advertisers’ algorithms bid against each other in real time to show an ad to a web user who matches their target demographic;
* An ad network, which connects the exchange to the websites and apps that display the ads;
* And the all-important user data that enables the targeting of ads at the right person.
Since both companies
have used their vast resources over the past two years to make sure everything they do is GDPR-compliant, the consumer brand-owners have probably felt more confident just working with them rather than companies who are active in just one part of the chain. AppNexus, a digital advertising supplier, estimates that about half of European marketing dollars went through DoubleClick before GDPR. On May 25, that surged past 95 percent, before declining again.
None of this is to suggest that GDPR means that Google and Facebook now have a lock on all aspects of the digital ad business. Publicis says it doesn’t expect any further detrimental impact from the new rules, and ad agencies will continue to act as a gateway between the brand-owners and the digital places where their ads are displayed. But, make no mistake, the Silicon Valley companies want that business too and GDPR appears to have strengthened their hand in trying to create a one-stop shop for advertisers.
So while that Android fine was a big one, it’s worth remembering that Google and Facebook got $135 billion of ad sales revenue last year – Google’s was $95.4 billion. Any extra edge will be very lucrative indeed.