As the 2018 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.
Despite all the headline-making issues from the past few years, the big five are all growing at a rate faster than overall adspend growth. Facebook is growing and monetising its user base outside of the US, but it’s their new advertising formats within Stories that received significant attention; there are 2 million active advertisers across Facebook, Instagram and Messenger – that’s close to one-third of the total active advertisers across all of Facebook apps. Sitting close in the third position is Amazon, with $10.1 billion in reported ad revenue. This figure is up 95% year-over-year, a growth rate that far outpaces the growth seen in their e-commerce revenue with US sales climbing to 19.7% in the latest quarter and international sales growth at 15%. The bottom line? Advertisers must increase their focus beyond the duopoly to maximise their value and maintain a media advantage.
Cost is becoming more complicated as the different platforms evolve. Google feels attractive with click volume increasing by 66% and CPCs continuing its decline, falling 29% vs. last year. YouTube is seen as a leading contributor to lower CPCs. With Facebook, Instagram’s ad prices are expected to rise as demand increases for its e-commerce opportunities. This is because advertisers will be able to get a clear ROI on their ad spend. With Amazon, we expect prices to rise thanks to increased competition between advertisers as adoption of the advertising platform increases. Now more than ever, advertisers must invest in careful cost-efficiency analysis to determine the optimal mix with a clear understanding of their contribution to advertisers’ revenue and overall ROI.
Amazon has shifted the battleground for the big platforms to focus on commerce. Whilst 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 making Instagram ads a critical part of a brand’s repertoire in driving online sales a priority. Advertisers must review their partnership models and ensure they have commerce stakeholders engaged in the management of these partnerships in order to take advantage of the latest developments in commerce.
Google and Amazon continue to invest in cloud-based services, growing 31% and 45% respectively. Because of their ability to host big data sets from advertising activities and deliver advanced analytics including machine learning-based services, there’s an opportunity for advertisers to drive efficiencies by taking advantage of these evolving offerings.
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 order to tailor the user experience.
Authored by Benoit Cacheux, Global Head of Digital & Innovation at Zenith