Gaming & Culture
The ad market is recovering
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Ads are the lifeblood of Big Tech. When the ad market slows as it did last year, companies like Alphabet, Meta, Amazon and even Microsoft suffer.
Tech's biggest businesses have endured a conservative advertising landscape in recent quarters as companies look to conserve cash in this difficult environment characterized by economic uncertainty and high interest rates. However, new data from a number of tech businesses indicates that the ad market is recovering, partly due to AI.
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Yesterday, we saw how AI is beginning to help Alphabet and Microsoft. Today we're studying quarterly results of Alphabet, Meta and Snap, but instead of focusing on AI, we're looking to see how their advertising incomes can help us understand the market.
We'll start with search, move to social ads, and wrap with Snap's confidence for the near future and its reminder that advertising spend can shift quickly.
A changing advertising market
Investors liked what Alphabet had to report earlier this week and sent its shares up by around 5.5% yesterday and another 1.8% this morning.
Here are the key numbers regarding advertising from Alphabet:
"Google Search & Other" reported revenue of $42.6 billion in Q2 2023, up from $40.7 billion a year ago.YouTube advertising revenue rose to $7.7 billion from $7.3 billion.Revenue from Google's Network business dipped, but Alphabet's advertising unit did well, reporting revenue of $58.1 billion from $56.3 billion a year earlier.During the company's earnings call, CFO Ruth Porat said:
Turning to our outlook for the business, with respect to Google Services, first, within Advertising, we were pleased with the acceleration of Search advertising revenue growth in the second quarter. . . . And in YouTube, we saw ongoing signs of stabilization in advertiser spending. We are prioritizing product focus on increasing quality consumption of video content with both Shorts and in the Living Room, which is translating into improved monetization.
That's encouraging. Philipp Schindler, Google's chief business officer, added a little more color:
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