2018.07.27 Last Week in Digital Media

Last Week in Digital Media / By

It’s Q2 reporting season, so amongst the last week in digital media news, I’ll also provide a bit more details on Alphabet an, Facebook’s Q2 Results as they tell very different stories about consumers and digital advertising.

Alphabet Q2 Results

  • Alphabet reported better than expected Q2 results (full details). Revenue US$32.7B, a 26% increase on a year ago.
  • Advertising counted for the bulk of the revenue at $28B (up 24% on a year ago)
  • Earnings Per Share (EPS) $4.54 including the EU fine ($11.75 without)
  • Paid Clicks increased 58%; average money that Google receives on a click fell 22%
  • Shares were up over 3% following the release of results

It’s clear the EU Android fine had an impacted on the results, but keep in mind Alphabet will be appealing the decision. Outside of the EU decision, Google has not had the headwinds of Facebook (read on) and appears relatively immune to GDPR and YouTube’s brand safety challenges.

Facebook Q2 Results

  • Facebook failed to meet Wall St expectations on revenue and user growth (full details)
  • Facebook reported $13B in revenues (up 42% on a year ago)
  • 91% of revenue came from mobile.
  • Average Revenue Per User (ARPU) was $25.91 in the US/Canada; $5.97 worldwide.
  • Earnings Per Share (EPS) $1.74
  • Daily and Month Active Users (DAU/MAUs) were up 11% each; at 1.47B and 2.23B respectively
  • Facebook revealed that 2.5B use a Facebook owned app (FB, Instagram, WhatsApp)
  • On the earnings call, Facebook’s CFO told Wall St that the numbers wouldn’t get better this year.
  • In after-hours trading and the following day, Facebook’s stock fell by 20% (around $120B in market cap)

There is a feeling that Facebook has peaked in North America and Europe (the latter in part to GDPR). There’s a great Bloomberg article which charts the quarterly growth decline of key Facebook metrics and another noting that Facebook’s days of easy growth are over. Facebook did try to open an innovation hub in China during the week but the approvals were withdrawn and the plans canceled in about 24 hours. It is Facebook’s first full quarter post the Cambridge-Analytica scandal. Facebook’s slowing user growth hasn’t benefited twitter user growth (read on) and we’ll have to wait and see the impact (and results) for Snapchat (Snapchat Q2 is August 7th).

General

  • Spotify also released the quarterly results (details). Of note, it now has 83million paid subscribers but more importantly for advertisers, 101M ad-supported Monthly Active Users (MAUs). Monthly Active Users grew 30% year on year.
  • Amazon’s Q2 results came out during the week (details). Amazon doesn’t provide a detailed breakdown on the ad side of the business (classifying it as “other income”), but in the investor media-release, Amazon’s Ad Revenue (other income) is now worth almost $2.2B (up 129%). In Amazon’s earnings call transcript, the CFO did provide some direction on what to expect in Amazon’s ad product business going forward specifically ad product tool usability, automation, new ad products, and measurement. If you’re interested in the financials on all the other sides of Amazon’s business, recode has a good summary.
  • twitter’s Q2 results, like Facebook, disappointed the market (stock dropped 20%). In the letter to shareholders, twitter reported revenue of $711M but monthly active users fell to 335M (from 338M). twitter issued weak guidance but this is offset by a few positives which include a record profitable quarter ($100M) and revenue growing at 24%. twitter’s video ad products count for half of the profit and it is the fastest growing ad product.
  • In the must-pay-attention news, the latest Google Chrome update (v68) will mark non-HTTPS sites as insecure. This applies to all sites, not just eCommerce sites. There are details explaining why on the Google Chrome blog, but if you’re running a campaign where links go to non-encrypted domains you may see a significant drop in conversion metrics. Most clients should be OK as Google has been hinting at this change for a while, including downranking non-HTTPS domains in SEO (since Feb 2018).
  • Snapchat has opened a Private Marketplace (PMP) enabling advertisers to buy inventory in specific shows on Discover. Snapchat’s 6-second unskippable ads will also be coming to the PMP.
  • In other Snapchat news, the platform is working to get closer to the influencer community. Specifically connecting influencers to brands with a “Storytellers” pilot program. Limited to five (5) of Snapchat’s most popular creators, the program includes not only brand integration but marketing/consulting advice on how to best use the platform.
  • Linked In is adding voice messaging / the ability to send audio messages. Coming to all users over the coming weeks there are no details on whether this will be an ad product (although don’t be surprised if you get personal1:1 messages from people trying to sell to you this way).
  • Apple has expanded their Search Ads product offering to six (6) more countries (France, Germany, Italy, Japan, South Korea, and Spain). This brings the total support to 13 markets. You can start creating ads in the new markets today, but ads only start going live in new markets from August 1,
  • still with Apple, the company has expanded their iMessage Business Chat offering. New brands to take advantage of Business Chat include Aramark, Four Seasons, Harry & David, and American Express.
  • Viacom has acquired Awesomeness TV (ATV), a digital-first influencer/creator content creation company. Viacom is really doubling down on the space, having already acquired Vidcon and WhoSay.

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eSports

Trust, Safety, and Privacy

Have a great week.

Joshua

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