Just before the holidays, the Canadian Media Concentration Research Project released its two annual reports diving deep into the state of Canadian media and advertising.

Led by professor Dwayne Winseck from Carleton University’s School of Journalism and Communication, the independent research’s core purpose is to assess if Canada’s communications, media and internet industries have become more concentrated, and therefore subject to the problems and abuses that can arise from a lack of competition.

In doing so, it provides a detailed picture of the media and advertising landscape in Canada, and how it has changed over the years. Unsurprisingly the biggest change agents in recent years have been Google and Facebook.

The telecommunications, internet and media industries in Canada, which the CMCRP refers to as the “network media economy,” generated revenue of $91.3 billion in 2019. The “big six” tech giants—Google, Facebook, Netflix, Amazon, Twitter and Apple—had combined revenue of $9.3 billion.

By comparison, BCE had revenue of $24.9 billion, representing 28% of the total network media economy, with the top five Canadian companies (Bell, Telus, Rogers, Shaw and Quebecor) accounting for 72.5% of the total network economy.

The picture changes markedly when the focus is just on advertising, however. Here’s some of the key data:

• $15.6 billion: Total ad market in Canada in 2019.
• $8.8 billion: Total online ad market in Canada in 2019, up from $7.7 billion the year before.
• $4.8 billion: Google’s Canadian ad revenue in 2019, up from $1.4 billion in 2011. Google takes in 50% of all online advertising in Canada.
• $2.6 billion: Facebook’s Canadian ad revenue in 2019, up from $181.4 million in 2011.
• 80%: Google and Facebook’s share of the total online ad market, up from about 66% four years ago.
• 45%: Google and Facebook’s share of ALL ad spend in Canada in 2019, up from 36% in 2017.

While the growth of Google and Facebook is often blamed for at least some of the problems faced by traditional media, and the authors conclude that Google and Facebook constitute a digital duopoly for online advertising in Canada, they point out that “they do not dominate the total advertising market.”

What’s more, they write, advertising comprises a small and declining part of the overall media economy as, for example, revenue from subscription based media increases.

However, the case that Google and Facebook aren’t the destructive forces they are sometimes depicted as by traditional media also explains the tough times felt by ad agencies in Canada. “[T]he scramble for advertising dollars is coming to a head exactly at the moment when advertising spending appears to have stalled and even declined over the last decade when measured, in inflation-adjusted dollars, on a per-capita basis.”

In other words total ad spend in Canada has been declining for years relative to the rest of the economy: that’s bad news for agencies, but even worse news for traditional ad-supported media.

“Since 2008, total advertising spending has slowed, stagnated or shrunk, in real dollar terms, relative to the size of the Canadian economy [gross domestic income], in relation to the size of the media economy and on a per capita basis,” the authors write.

Canadian ad revenue on a per-capita basis in 2019 was $420.10, up from $405.90 in 2008, but the authors describe this “a painfully slow CAGR of .33% for just over a decade.” They also found that ad spending as a percentage of gross domestic income has been relatively flat, at around .68% to .7%.

The ad decline has abated somewhat since 2018, but the “lost decade” after 2008 saw $800 million to $2.3 billion in lost ad revenue “relative to what it would have been had ‘normal’ growth rates held steady,” they wrote. These losses hit traditional ad-supported media—broadcast television, radio, newspapers and magazines—the hardest.

However, the studies’ authors caution against calls for government action to defend traditional media against the growing digital giants. “Ultimately, these are macro-economic forces and, as such, placing the blame for the woes of Canadian media at the feet of Google and Facebook will do nothing to alter this reality,” they write. “Given these structural realities, regulatory solutions put forward by industry, think tanks, lobby groups and others to date may make for great sound bites but they also run the risk of being ineffectual.”

Using public policy against Google and Facebook, they add, “would do nothing to alter the faltering state of advertising. Nor would such measures address the massive economies of scale that both companies enjoy and that traditional media will be hard-pressed to match.

“As a result of the hyper-efficient digital infrastructure that global Internet giants make available to do the job—i.e. deliver audiences to advertisers at scale and with fine-grained precision in cost-effective ways—advertisers are, unsurprisingly, sending their advertising dollars to the most effective in the business: Google and Facebook. It could also be the case that it is just such ‘efficiencies’ that are also putting some of the downward pressure on advertising spending to begin with.”