The following is a guest post by John Willkom, senior vice president of e-commerce at The Mars Agency. Opinions are the author's own.
Last Wednesday, Snap Inc. announced quarterly earnings. Already richly valued, the stock got absolutely hammered after hours, falling as much as 30%. And while investors ran to the door, it wasn't so much the numbers announced as it was the commentary outlining the "why."
This article isn't about stock prices or company valuations, though. It's about the potential implications for digital advertising and, frankly, the future of the internet.
Apple has long argued that it's the white knight in this whole equation and user privacy is its North Star. However, in the past six months, its Search Ads business has more than tripled in market share, according to the Financial Times.
Meanwhile, fellow Silicon Valley darling Google owns 92.47% of the search engine market, according to Statista's June research. Google's rumored spat with Roku was once considered good old negotiation. Now that details are airing publicly, it's becoming clear that Google is flexing its muscles and not giving an inch when it comes to revenue share for YouTube properties on Roku devices. In addition, the recent attorney general's lawsuit against Google was unsealed and the following excerpt caught my eye:
So, what does this all mean in the grand scheme of things? Here are my predictions:
- Apple and Google have had enough with upstarts (and Facebook) carving out meaningful share in the ad market. However, Apple's April move and Google's recent push are sounding a lot like my favorite board game, which starts with "Mo" and ends with "oly." It's an elegant dance that has always attracted government scrutiny.
- Connected TV is the future of the internet. Roku's upcoming earnings announcement on Nov. 3 will either confirm or deny that ad dollars aren't being reduced. Rather, they are moving to streaming TV. We'll get strong confirmation even before that, as Facebook reported after the market closed on Oct. 25.
- Apple and Google will continue to push hard into connected TV. Television as we know it could look completely different in the next 18 months. Apple transformed the desktop, the phone, and how we listen to music. I see this as a great fight for who will own that final screen in every household. Again, this has nothing to do with the TV device itself, but rather the role it plays to own streaming TV ad dollars. That starts with search, and Google's dominance everywhere else creates an "all hands on deck" scenario for this final screen.
Apple and Google didn't get to $2.5 trillion and $1.8 trillion valuations by settling for second place. Upcoming earnings announcements may be the most scrutinized of all time, as we're in the middle of disruptive change; we just don't know it yet.