What Can We Learn from the Recent Media Earnings Reports?
Google, Facebook, Snapchat, Twitter, and every other digital channel recently released their numbers. What can we learn from these media earnings reports, and what does it tell us about the future of digital marketing?
Let’s start with one things that is clear: small advertisers are investing heavily in digital advertising after a year where budgets were slashed considerably. The recent media earnings reports show that revenue for Google, LinkedIn, Snapchat, and Facebook are all up significantly. For Google, for example, year-over-year revenue growth shot up 69% in Q2. That’s telling, both from the perspective of recovery, as well as indicative of where marketing budgets are being allocated. This is particularly true for small advertisers who are more conscious of controlling spend and looking to run more manageable micro-campaigns. Where we continue to see cuts, however, are from larger advertisers, who seem to be reevaluating how millions are spent every year.
In a recent study from Gartner, where over 80% of respondents represented companies with over $1 billion in revenue, estimates showed that the portion of revenue that would be allocated to marketing and advertising was cut by almost half, from 11% in 2020 to 6% in 2021. While the total spend is still considerable, the ratio suggests an increasing move to isolated campaign spends, rather than ongoing national campaigns. The most likely reason is a greater focus on direct return-on-investment after 2020 sent shockwaves through the business world. You might wonder why, then, did we see such success in this week’s media earnings reports? Small advertisers are jumping on the digital ad bandwagon – if a little late – and we can certainly expect to see that trend continue.
Noise on social has made organic growth significantly more difficult, especially when it comes to direct e-commerce sales, which many brands shifted to (some exclusively) in 2020. As a result, paid campaigns have increased at every level, and as you can probably guess, there are significantly more small advertisers than billion-dollar organizations. This has long been a goal of digital media companies: scale small- and medium-sized advertisers globally. 2020 seemed to provide the jolt needed for many on the fence, and we are now seeing the results.
Year-over-year growth is sure to even out as economies open back up, but the trend of seeing an increase in small spenders filling the coffers of digital media companies, rather than the traditional major advertisers making up the majority, is something we should get used to.