The FANG gang has some serious teeth in Ad spending!
We Jumped into the latest #AdAge 2019’S report on US ad Spending. Spending is up from last year and big internet economy players (Amazon, Facebook or Uber) are leading the way.
(photo credit Michael Waraksa )
For the first time, all four FANG companies—Facebook, Amazon, Netflix and Google parent Alphabet—rank among the top 100 spenders in Ad Age Leading National Advertisers 2019 (US market).
More over, this year, the money spent on digital advertising in the United States will surpass that spent on traditional ads for the first time, according to forecasts by #eMarketer, representing a landmark inversion of how advertisers budget their resources and highlighting the rise of digital media as platforms seek consumers’ attention.
The “FANG” gang is helping drive ad spending growth as the companies ratchet up advertising to build brands and protect their reputations.
Facebook’s 2018 estimated U.S. ad spending soared 236 percent to $475 million, the highest growth rate among the top 100 advertisers. Netflix’s U.S. spending last year rocketed 70 percent to $1 billion, the second-highest growth.
Amazon’s estimated U.S. advertising and promotion spending jumped 32 percent to $4.5 billion. That made Amazon the nation’s third-largest ad spender behind Comcast Corp. and AT&T.
Alphabet’s estimated U.S. advertising and promotion spending increased 23 percent to $3 billion.
A closer look at what’s up with FANG ad spending
Facebook disclosed it more than tripled worldwide ad spending to $1.1 billion in 2018. Facebook has pumped up spending as it plays both defense (addressing issues over privacy and fake news content) and offense (promoting its brands and services).
Amazon spent $8.2 billion on worldwide advertising and promotion in 2018, with spending growth (up 30 percent) essentially in line with growth in net sales. Amazon’s spending as a percent of sales held at 3.5 percent; it’s been in the range of 3.5 percent to 3.7 percent since 2014. Amazon spends heavily on social media, other online advertising and TV to attract customers.
Netflix boosted worldwide ad spending in 2018 by 66 percent to $1.8 billion. Ad spending as a percent of revenue jumped to 11.4 percent from 9.3 percent. In its latest 10-K annual filing, Netflix said higher U.S. marketing spending—$1 billion last year, up from $604 million—reflected “increased investments in marketing of new original titles.” Netflix is working to make a costly bet on content pay off with more subscribers. Advertising accounts for about three-fourths of the company’s marketing spending.
Buyers and Sellers
Three of the four FANG members—Alphabet, Facebook and Amazon—are both big ad sellers and buyers.
Alphabet last year generated 85 percent of its $137 billion worldwide revenue from advertising. Facebook generated 99 percent of its $56 billion revenue from advertising. Amazon’s “Other” revenue bucket had $10 billion in net sales, primarily from the sale of advertising services. (That’s a drop in the bucket, given that Amazon had overall net sales of $233 billion.)
Google and Facebook — are expected to maintain their dominant hold on ad dollars, as the tech giants’ combined ad revenue will command about 59 percent of the market. Facebook’s market share expected increase will be driven by Instagram, according to eMarketer. There’s strong demand for ads in Instagram Stories, and Instagram still benefits from the perception that it’s less impacted by the challenges core Facebook has faced.