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体育平台app Web Design  /  体育平台app  /  COVID helped drive record ad revenue for big tech in Q3

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Multiple tech companies announced quarterly earnings on the same day last week, including Apple, Google, Amazon and Facebook. Apple is the only company in the “antitrust quartet” that doesn’t formally report ad revenue, although third party estimates argue that Apple might bring in $2 billion [1] this year from search ads. Google, Facebook and Amazon each saw significant advertising revenue growth – especially against the backdrop (or perhaps because) of COVID-19 and ad-budget pressure.

Double-digit ad growth

Arguably the biggest single beneficiary of COVID-19 is Amazon, which has been the go-to e-commerce site for millions of U.S. consumers during the pandemic. The company reported gross revenues of more than $96 billion, representing 37% YoY revenue growth. Advertising makes up most of what is reported as “other” revenue in the company’s earnings statement. It reached roughly $5.4 billion, up more than 50% YoY.

Google reported just over $46 billion in total revenue and $37 billion in ad revenue. Paid search contributed $26.3 billion, while YouTube brought in $5 billion, a YoY increase of 6% and 32%, respectively.

Facebook generated $21.5 billion in third-quarter revenue, almost 99% of which was from ad spending. More than 90% of that revenue comes from mobile user engagement. On its earnings call, Facebook said it now has 10 million active advertisers, a majority of which are small businesses. That’s up from 9 million advertisers in Q2.

Accordingly, the widely publicized StopHateForProfit [2] Facebook advertising boycott appeared to have little or no impact on company’s revenue, which grew 22% compared with a year ago.

COVID-driven commerce

Other tech companies, including Shopify also reported earnings on October 29. Shopify posted 96% YoY revenue growth, blowing past investor expectations. Another major beneficiary of COVID-driven online shopping [3] , the company has been the go-to solution for small businesses and others seeking to “commercify” during the pandemic. But Google and Facebook have equally been focused on e-commerce.

In its earnings release [4] , Facebook discussed the migration of offline shopping online during the pandemic. It said, “online commerce is our largest ad vertical,” and discussed how a return to normalcy might adversely affect e-commerce-related ad revenues in 2021. Not long ago, the company rolled out Facebook and Instagram Shops [5] , Checkout on Instagram [6] and the Facebook Shop tab.

So-called social commerce will continue to be a major growth channel for online shopping in 2021. Pinterest, Snap, YouTube and TikTok figure prominently in this segment as well.

Separately, Google and Amazon are locked in a long-term battle for product-search supremacy. Google has made a number of moves recently that seek to bolster its competitive position vs. Amazon (e.g., free product listings [7] , nearby product inventory [8] ads). But when it needs to, such as defending against antitrust claims, Google points to [9] Amazon’s shopping-search dominance as evidence it doesn’t have a monopoly on search or ads.

Beyond product search, Google CEO Sundar Pichai said, on the company’s earnings call in passing, that YouTube was “an important platform for e-commerce.” He cautioned, however, that it’s still early in for the channel.

Concentration of spending

The economy is still quite shaky, although reported third-quarter GDP growth was strong. The recovery, to the extent we can call it that, is not evenly distributed. Small businesses are suffering especially [10] . The revenues being reported by the largest tech platforms, and a few others, are not representative of the larger economy. They are, however, indicative of trends in the larger advertising ecosystem.

To put the third quarter ad revenues of Google ($37B), Facebook ($21B) and Amazon ($5B) in some perspective, advertising-driven companies in the next tier down — Snap, Pinterest and Twitter — also saw gains, but combined their ad revenues totaled less than $2 billion:

  • Snap:  $679 million (+52% YOY)
  • Pinterest: $442 million (+58% YOY)
  • Twitter ad revenue: $808 million (+15% YOY)

Just as the U.S. economy has become more bifurcated over time — with winners and losers — so has the online economy with increasing revenue concentration and control over ad spend. That’s what the recent House Judiciary Subcommittee on Antitrust report argues [11] .

The internet is the largest advertising medium in the U.S., more than $50 billion larger than the second largest medium (television), according to PriceWaterHouseCoopers (. pdf [12] ).

We’re now in a largely feast or famine environment, amplified by COVID, where money is flowing almost exclusively to the big platforms; they have massive audiences and are safer bets for marketers. The IAB reported [13] in 2019 that the top 10 internet companies controlled about 77% of digital revenue, up from 76% in 2018. That one-point gain may not sound like much, but in real dollars it represents $14 billion in revenue unevenly distributed across 10 companies.

In 2020 it’s going to be even greater.


About The Author

Greg Sterling is a Contributing Editor to Search Engine Land, a member of the programming team for SMX events and the VP, Market Insights at Uberall.

References

  1. ^ $2 billion (searchengineland.com)
  2. ^ StopHateForProfit (searchengineland.com)
  3. ^ COVID-driven online shopping (searchengineland.com)
  4. ^ release (investor.fb.com)
  5. ^ Facebook and Instagram Shops (searchengineland.com)
  6. ^ Checkout on Instagram (marketingland.com)
  7. ^ free product listings (searchengineland.com)
  8. ^ nearby product inventory (searchengineland.com)
  9. ^ points to (blog.google)
  10. ^ Small businesses are suffering especially (searchengineland.com)
  11. ^ argues (searchengineland.com)
  12. ^ pdf (www.iab.com)
  13. ^ reported (searchengineland.com)

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