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Sept. 11, 2019, 8:01 a.m. EDT

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Sep 11, 2019 (Financial News Media via COMTEX) -- FN Media Group Presents Safehaven.com Market Commentary

New York, NY - September 11, 2019 – The US digital advertising industry has officially crossed the $100-billion mark, making it bigger than TV, radio and print media advertising. As this growth continues, a remarkable transformation is taking place within the industry, with the massive Google-Facebook advertising duopoly facing an existential challenge. Mentioned in today's commentary includes: Amazon.com, Inc. /zigman2/quotes/210331248/composite AMZN -1.68% , Verizon Communications Inc. /zigman2/quotes/204980236/composite VZ +1.06% , Yelp Inc. /zigman2/quotes/201334325/composite YELP -0.69% , Snap Inc. /zigman2/quotes/205087158/composite SNAP -1.89% , Alibaba Group Holding Limited /zigman2/quotes/201948298/composite BABA -4.37% .

eMarketer is forecasting that the industry will top $170B by 2021. And with Google and Facebook currently hogging 60 percent of the market, American publishers and other media outlets are now fighting back.

Google made $4.7 billion in revenue from news content in 2018, while the entire news industry together only netted $5.1 billion. That's over 2,000 news publishers combined.

Publishers everywhere are struggling. They're simply not growing at all. They're merely surviving. And it's all because of the mountains of first-party data that they're not collecting because they don't have a platform to monetize it. They're under immense pressure to grow ad revenues , yet they are beholden to the likes of Google. And while Google and Facebook are facing plenty of opposition, including being called before Congress, publishers won't wait for some legal loophole to fix all of their problems.

Their survival depends on the quiet (until now) rise of new content management and data-collection platforms that can rewrite the rules of who gets rich off of advertising. The future of publishing is designed to bypass the so-called digital giants, but in the meantime, there are also some other giant players encroaching on the digital ad duopoly.

Here are 6 trends that could loosen Google's hegemony and re-write the advertising industry playbook.

#1Leveraging Website Real Estate

A few years ago, trying to claw respectable market share from the industry heavyweights seemed like a really long shot. Yet, Amazon is now on course to claim $10B, or nearly nine percent, of ad dollars in 2019 with Pivotal Research predicting a $38B haul for the company in 2023.

Amazon seems to be hitting all the right buttons. The retail giant understands how Google, Microsoft, and Apple leverage advertising. They are just doing it in more aggressive, more profitable ways.

The giant online retailer has perfected the art of leveraging website real estate to display highly targeted ads to its 2.3B users. As a result, nearly 50 percent of online product searches are conducted on Amazon's website.

Amazon /zigman2/quotes/210331248/composite AMZN -1.68% is also pushing hard into mobile video ads–a direct attack on Google. It's even allowing brands to track traffic from Facebook in its latest push to cozy up to big marketers. With Amazon's high-margin cloud business, AWS, in the pink of health, Amazon certainly has the wherewithal to take on the digital ad giants head-on.

AMZN stock has climbed 18.3 percent in the year-to-date and 420 percent over the past five years thus making it a bit pricey. But with the digital ad gravy train served up, this stock still looks like a buy.

#2 Harnassing The Power Of Data

The only way to really take on the big guns is to attack from all sides. And that's exactly what Frankly Inc. ( TLK ; FRNKF ) is doing. Frankly a data-hungry content management company that reaches 100 million people and 75% of American households. It's entered the fray with a data solution that could give the biggest Western publishers the tools they need for digital advertising independence--with a ton of upside to boot.

Frankly offers broadcasters, media companies and publishers a platform for managing and monetizing all of their content and collecting targeted data from each of their users. Right now, it is the only company of its kind out there, and some very big names – including CNN and Vice – are already customers.

Frankly aims to shift the percentage of digital ad dollars by slipping in through the back door of this lucrative market, through the biggest mainstream publishers. Google doesn't even produce any news, yet it's raking in all the revenues. That's a tough pill for publishers to swallow.

Frankly's answer? To offer publishers all the tools they need not only to create their ad revenue, but also to follow the upside with massive, first-party data collection that, when you add it up, is worth about $175 per person . That's a gold mine for publishers who barely stay afloat while Google gets rich on their content.

Are publishers desperate enough to take on Google? You can bet on it.

That's why Newsweek just signed a deal with Frankly that's designed to help the news major turn the tables. But it's just as big a deal for Frankly because it means that Frankly will be running all the information capture operations on Newsweek and doing all of Newsweek's ad sales. It will grow Newsweek's ad revenue by tens of millions of dollars, which all goes through Frankly in the end.

For Frankly, this is a $50M, multi-year service agreement with one of the biggest news producers in the world. But it also means first-party data access to Newsweek's 40 million monthly active users.

This is a milestone in the industry because it's the first partnership of its kind--ever-- and it demonstrates the value of leveraging a fully integrated multi-media platform such as Frankly's. Frankly has 100+ million active users across its network, and's just signed a $50-million, multi-year deal with giant Newsweek, which will add 40 million more.

It also recently hooked CNN and VICE in its deal to acquire Vemba's advanced video technology. For a company with a market cap of only $30 million, harnessing the priceless first-party data of 75% of this country, undervaluation isn't much of a stretch of the imagination until the news flow starts to catch up with the first-data bounty, starting with Newsweek.

#3Strategic Acquisitions

Beyond data, some companies are building a warchest of assets through calculated acquisitions. Take Verzion /zigman2/quotes/204980236/composite VZ +1.06% , for instance, in 2017, the company acquired Yahoo and AOL in a bid to create a rival ad sales business to Google and Facebook.

Verizon Media (formerly Oath) now houses popular brands such as The Huffington Post, TechCrunch and Yahoo Sports which collectively attract ~210 million monthly users. From a financial viewpoint, the business has not been a resounding success with Verizon declaring a huge $4.6B writedown of its media properties last year–essentially declaring them nearly worthless.

Nevertheless, Verizon Media's value proposition remains intact: more transparency and accountability in advertising. By focusing on high quality, professionally produced content and products, Verizon Media has been trying to avoid the same scrutiny faced by its bigger competitors, who struggle to stem the tide of fake news and violent videos.

With the Association of National Advertisers estimating that fraudulent, bot-driven traffic costs the industry ~$7B every year, Verizon Media will continue having its takers.

/zigman2/quotes/210331248/composite
US : U.S.: Nasdaq
$ 1,757.51
-29.97 -1.68%
Volume: 3.37M
Oct. 18, 2019 4:00p
P/E Ratio
72.92
Dividend Yield
N/A
Market Cap
$869.36 billion
Rev. per Employee
$359,671
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/zigman2/quotes/204980236/composite
US : U.S.: NYSE
$ 61.05
+0.64 +1.06%
Volume: 12.35M
Oct. 18, 2019 6:30p
P/E Ratio
15.95
Dividend Yield
4.03%
Market Cap
$252.50 billion
Rev. per Employee
$905,626
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/zigman2/quotes/201334325/composite
US : U.S.: NYSE
$ 32.93
-0.23 -0.69%
Volume: 805,654
Oct. 18, 2019 6:30p
P/E Ratio
46.26
Dividend Yield
N/A
Market Cap
$2.34 billion
Rev. per Employee
$156,347
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/zigman2/quotes/205087158/composite
US : U.S.: NYSE
$ 13.52
-0.26 -1.89%
Volume: 39.06M
Oct. 18, 2019 6:30p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$18.65 billion
Rev. per Employee
$409,309
loading...
/zigman2/quotes/201948298/composite
US : U.S.: NYSE
$ 169.13
-7.72 -4.37%
Volume: 14.59M
Oct. 18, 2019 6:30p
P/E Ratio
30.26
Dividend Yield
N/A
Market Cap
$440.34 billion
Rev. per Employee
$781,259
loading...
/zigman2/quotes/210331248/composite
US : U.S.: Nasdaq
$ 1,757.51
-29.97 -1.68%
Volume: 3.37M
Oct. 18, 2019 4:00p
P/E Ratio
72.92
Dividend Yield
N/A
Market Cap
$869.36 billion
Rev. per Employee
$359,671
loading...
/zigman2/quotes/204980236/composite
US : U.S.: NYSE
$ 61.05
+0.64 +1.06%
Volume: 12.35M
Oct. 18, 2019 6:30p
P/E Ratio
15.95
Dividend Yield
4.03%
Market Cap
$252.50 billion
Rev. per Employee
$905,626
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