The clock is ticking on U.S. social media companies’ dominance in digital advertising.
TikTok, a favorite among those under 30, is gobbling up market share to the detriment of Alphabet Inc.’s
Google, Facebook parent company Meta Platforms Inc.
and Snap Inc.
— all of whom report quarterly results next week, according to a survey of 50 U.S. ad buyers by Wall Street firm Cowen.
Those buyers, who represented $31 billion in ad sales last year, said they plan to boost their digital budgets on TikTok to 9.4% by 2024 from 8% in 2022.
Cowen expects TikTok’s digital ad revenue to explode to $36 billion by 2027 from $10 billion in 2022, lifting its share of the global market to 5.4% in 2027 from 2.3% last year.
By comparison, Google’s ad haul is expected to grow to $279.1 billion in 2027 while its share remains around 42%, Cowen predicts. Core Facebook’s ad sales will reach $115.9 billion in 2027 as its share drops to 17.6%, and Snap’s take will hit $7.7 billion amid a flat market share of 1.2%.
Some 46% of respondents chose TikTok as the platform where their top client would most prefer to advertise, Cowen analyst John Blackledge wrote, well ahead of Instagram’s Reels (24%) and Google’s YouTube Shorts (22%).
An interesting wild card is Netflix Inc.
which just unfurled a lower-cost advertising service. Cowen predicts its ad sales will soar to $6.2 billion in 2027, or about 1% of the worldwide market, rivaling Snap and passing Twitter Inc.
The fluid nature of digital advertising comes amid a downturn in the market as ad buyers more closely watch budgets and Google’s ad tech business faces a lawsuit from the Justice Department for what it claims is monopolistic behavior.
Indeed, the rise of TikTok has unsettled Meta and Google executives, who routinely discuss its threat during their earnings calls and in interviews.
In an interview with analyst Ben Thompson’s Statechery newsletter in October, Meta Chief Executive Mark Zuckerberg called TikTok as a “very effective competitor” and admitted Meta was “somewhat slow to this because it didn’t fit my pattern of a social thing, it felt more like a shorter version of YouTube to me,” he said.