As the latest earnings season for the digital giants – Facebook, Apple, Amazon, Netflix and Google – ends, we take a closer look at the evolution of their performance and assess the impact on advertisers. Below are the top five things you need to know.
Growth
Despite all the headline-grabbing stories from the past few years, the big five are all growing much faster than the overall ad market. Google is by far the biggest platform and is still growing rapidly, with a 22% increase in ad revenues in 2018. Facebook is growing and monetising its user base outside of the US, but its new advertising formats within Stories have caused the greatest excitement. There are now two million active advertisers across Facebook, Instagram and Messenger. Sitting close in the third position is Amazon, with $10.1 billion in reported ad revenue in 2018. This figure is up 95% year- over-year, a growth rate that far outpaces the growth seen in its e-commerce revenue, with US sales climbing by 20% in Q4 2018, and international sales growth by 15%. The bottom line? Advertisers must focus beyond the duopoly to maximise their value and maintain a media advantage.
Cost
Cost trends are becoming more complicated to analyse as the different platforms evolve. Google feels attractive, with click volume increasing by 66% and CPCs continuing their decline, falling 29% year on year. YouTube is as a leading contributor to lower CPCs. With Facebook, we expect Instagram’s ad prices to rise as demand for its e-commerce opportunities strengthens, because advertisers will be able to get a clear ROI on their adspend. With Amazon, we expect prices to rise as advertisers compete to make more use of its advertising platform. Now more than ever, advertisers must invest in careful cost-efficiency analysis to determine the optimal mix with a clear understanding of the contribution of each platform
E-commerce
Amazon has shifted the battleground for the big platforms, to focus on commerce. While Google does not report on shopping campaign performance, its CEO said the number of active daily shoppers during the holidays doubled year-over-year. Facebook has clearly indicated that Instagram ads play a critical role in its strategy to drive more online sales. Advertisers must review their partnership models, and ensure they have commerce stakeholders engaged in managing these partnerships to take advantage of the latest developments in commerce.
Cloud-based services
Google and Amazon continue to invest in cloud-based services, which have grown 31% and 45% respectively. They offer advertisers the opportunity to drive efficiencies by taking advantage of their ability to host big data sets from advertising activities and deliver advanced analytics.
Privacy regulations
New consumer privacy regulations have the potential to disrupt current ways of working between agencies, advertisers and these giants. Despite recent fines, the growth observed across all the big five platforms suggests that they prepared carefully for these changes to minimise the impact on their revenue and attractiveness to advertisers. These regulations will require new thinking on how to personalise at scale through the use of relevant, smart communications across every touchpoint. Regulations like GDPR have put the consumers in control of their personal data, and thus their advertising experience. It’s critical that marketers understand their audience and are agile and innovative in tailoring the user experience.
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