Digital ad market booms for Big Tech
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Illustration: Sarah Grillo/Axios
The world's biggest digital advertising companies saw significant sales growth last quarter, driving momentum for the U.S. stock market ahead of the 2024 election and foreshadowing a lucrative holiday season.
The big picture: After years of pandemic-driven volatility, the global ad market is finally starting to stabilize this year.
Zoom in: Investments in generative AI ad products, an influx of political ad dollars tied to the upcoming U.S. election, and healthy consumer spending drove strong revenue and profit growth for the world's biggest tech giants last quarter.
- Google's advertising revenue jumped more than 10% year-over-year, thanks in part to election-related ad spend, especially on YouTube, chief business officer Philipp Schindler told investors. AI-driven ad tools also helped boost efficiency for Google's ad partners, he added. "We believe AI will revolutionize every part of the marketing value chain," he said.
- Meta sales increased by 19% year-over-year, while profits ballooned 35% in the same period. Normally those figures would be enough to send Meta's stock price soaring, but instead it took a hit in after-hours trading because of a forecase of increased spending around AI.
- Snap Inc.'s revenue grew 15% year-over-year, thanks to investments in AI and AR that are driving innovation across Snapchat's advertising platform, Snap CEO Evan Spiegel told investors in a statement.
- Reddit's earnings cruised past analyst expectations for its second full quarter as a public company Wednesday, sending its stock soaring. The company's advertising income grew 55% year over year, helping to drive its first-ever profitable quarter.
- Roku earned more than $1 billion in revenue last quarter for the first time, thanks to strong growth (16% year-over-year) in its platform business, which includes advertising. It cited growth in the political, retail and consumer packaged goods ads verticals for helping to boost sales.
Yes, but: Some ad categories continue to face pressure, which could have an outsized impact on some companies.
- Meta said revenue growth in the Asia-Pacific region slowed significantly last quarter, due to the deceleration of ad spend from major Chinese advertisers. such as Temu and Shein.
- Roku said the health, wellness, media and entertainment verticals continue to face pressure. Broadly, media companies that spent big on ads promoting their streaming services over the past few years have pulled back on marketing in an effort to boost profits.
What to watch: Ad growth isn't expected to benefit traditional media companies this earnings season the way it has for Big Tech, except for local U.S. broadcasters, which are seeing political advertising windfalls.
