Fincredible MacroTalk February 16th: Advertising Trends
Insights on short-term advertising trends from company executives of $GOOG $GOOGL $FB $SNAP $PINS $YELP $TWTR $UBER $CL $CTHR $PAYC $PEP $MAT $NWS
Advertising spending keeps growing every year. With so many brands to choose from, companies are increasingly seeing the need to spend more and more on advertising to drive sales growth. This is especially true for small and medium businesses, which don’t have the brand awareness some big companies do.
To get an idea of how much companies value advertising spend, look at the price of a Super Bowl commercial over time. Companies are seeing more value each year in advertising and bidding up prices.
In this post, we’ve compiled quotes from company earnings calls highlighting recent trends in the advertising market.
All quotes are sourced from Fincredible.
Ad Sellers
Advertising sellers had very different views in their latest quarterly reports. Social media companies like Facebook, Snap and Pinterest reported a negative impact from macro headwinds their clients are facing, especially small and medium-sized businesses. On top of that, Facebook and Snapchat were also negatively affected by iOS IDFA changes that increase user privacy. On the other hand, Google, Uber and Yelp all reported very strong advertising growth, although Yelp was still well-below 2019 levels.
“Year-on-year performance was driven by broad-based strength in advertiser spend and strong consumer online activity. In the fourth quarter, retail was again by far the largest contributor to year-on-year growth of our ads business. Finance, media and entertainment and travel were also strong contributors.”
Philipp Schindler, Chief Business Officer
“Total Google Services revenues were $69.4 billion, up 31%. Google Search and other advertising revenues of $43.3 billion in the quarter were up 36%, with broad-based strength across our business, led again by strong growth in retail. YouTube advertising revenues of $8.6 billion were up 25%, reflecting strength in both direct response and brand advertising. The deceleration in the growth rate versus the third quarter of 2021 was driven primarily by lapping a strong recovery in brand in the fourth quarter of 2020. Network advertising revenues of $9.3 billion were up 26%, driven by AdMob.”
Ruth M. Porat, CFO
“Q4 was also the first holiday season after Apple's iOS changes, which have had an impact on businesses of all sizes, especially small businesses who rely on digital advertising to grow. This will continue to be a factor in 2022. We've also heard from advertisers about other macro trends that contributed to the headwinds in Q4, including global supply chain disruptions, labor shortages and inflationary pressures.”
Sheryl Kara Sandberg, COO
“And just to give some context of the $65 million increase in revenue, $42 million of that was advertising, $23 million was circulation and subscriptions, which is where those content licensing fees are. So a lot of it was advertising, a lot of that's being fueled by digital advertising and the work that the teams have done around driving those audiences and converting their businesses to digital and benefiting from obviously strong yields. And also the cost work that they've done, they've done a huge amount of cost work and heavy lifting over the past couple of years, which has really helped to underpin those results. So it does give us confidence about how those businesses are going to continue going forward.”
Susan Panuccio, CFO
“Many of the supply chain and labor-related headwinds our advertising partners faced in Q4 remain challenges as we enter Q1. In addition, while we made significant progress in navigating the iOS platform changes in Q4, we believe that it will take at least a couple more quarters for our advertising partners to build full confidence in our new measurement solutions.”
Derek Andersen, CFO
“The macro environment remains challenging for our CPG advertisers who are still dealing with supply chain and other macroeconomic issues. We believe this headwind could persist for a few quarters.”
Todd R. Morgenfeld, CFO
“So the Ad business, we talked about hitting a $225 million run rate in Q4, well above our targets. The momentum in the business is great. Keep in mind that, that the vast majority of that is Delivery, and we are building out ad products that run across Mobility and Delivery and grocery. Drizly is going to be a part of our ad operations. For example, Drizly advertising as a percentage of gross bookings is about 8%, which is pretty significant.
Dara Khosrowshahi, CEO
“Advertising revenue from restaurants, retail and other businesses increased over the course of the year to $377 million, an increase of 18% year-over-year despite the spread of new COVID-19 variants as well as ongoing labor and supply chain headwinds. Advertising revenue in our RR&O categories remained below 2019 levels at the end of the year, which we believe represents a substantial opportunity as local economies further recover. Ad clicks for the year increased by 24% year-over-year, while average CPC decreased by 5% as we continue to deliver more value to advertisers through new ad formats and ongoing optimizations to our ad system.”
Jeremy Stoppelman, CEO
“First, our work to improve personalization includes us developing a better understanding of customer ads, sometimes through improved machine learning, or through building products like followable topics. It also includes us getting better at matching creators and content to consumers. This enables us to create more relevant and personalized products that increase daily utility and also enables us to serve more relevant ads and can be particularly helpful in improving return on ad spend for performance-oriented advertisers while also improving the ads experience for our customers.”
Parag Agrawal, CEO
Ad Buyers
According to Colgate-Palmolive CEO, one of the key components of growing their sales has been their advertising spend. Companies all around the globe and from different industries have stated that they firmly believe in the benefits of advertising. Even though the contribution to growth is not always quantifiable, companies like Charles & Colvard, Paycom, Pepsico, and Mattel are consistent in giving more space for advertising in their quarterly budget.
“We have turned our growth trajectory around over the past few years, and a key component of this has been additional advertising spend. Our guidance for 2022 includes an increase in advertising to make sure we are able to sustain volume growth as we exit a period of very strong pricing.”
Noel Wallace, CEO
“We believe continued investments in paid and social advertising in support of our owned web properties and assets are paying off and are necessary to continue our growth trajectory.”
Don O'Connell, President, CEO & Director
“Our marketing plan throughout 2021 continue to perform well, delivering strong demo leads throughout the year as we spent aggressively on advertising.”
Chad Richison, CEO
“One, A&M for the year was up 11%. For the quarter, it was up 15%. But remember, when you're dealing with the quarter, that's not necessarily what's in the marketplace. That's sort of the A&M curve, and we book A&M on the revenue curve. In terms of spend, it was up in the quarter for sure. I don't know that it was disproportionately up relative to the rest of the year. And in terms of go-forward, I expect our A&M, as it generally has, will probably be in or around the same level of growth as the sales growth number is. Obviously, we feel terrific about the advertising we're doing. We think it's having the right impact. But we clearly were the beneficiaries of, in North America, some reduction.”
Hugh F. Johnston, CFO
“Advertising expenses for the quarter declined 7% to $266 million, reflecting some timing shifts between Q3 and Q4. For the full year, advertising increased by 4% as we continue to drive demand creation to support POS.”
Anthony P. DiSilvestro, CFO
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