According to their quarterly results, Alphabet and Meta lure back advertisers are sticking with safe havens Alphabet (GOOGL.O) and Meta Platforms (META.O), helping the tech giants steal market share away from smaller digital ad suppliers like Snap Inc (SNAP.N).
Tech companies that rely on ad revenue have faced difficult comparisons in the previous few quarters as a result of an advertising spending boom spurred by the pandemic by companies looking to reach customers online. After interest rates increased and record-high inflation stoked concerns about the economy, consumers reduced their advertising spending.
Alphabet and Meta lure back advertisers;
Stick to Familiar Platforms
However, a survey released this month by media and analytics business MAGNA predicted that the social media ad market would expand this year at a slightly quicker rate than it did in 2022. According to Brian Mulberry, a portfolio manager at Zacks Investment Management, Alphabet and Meta lure back advertisers are just returning to the platforms they are familiar with, like, and trust.
Although Google parent Alphabet’s first-quarter ad sales decreased from a year earlier to $54.55 billion, they were nevertheless above analysts’ expectations.
In order to compete, Alphabet and Meta lure back advertisers must “do more with less,” according to Philipp Schindler, Google’s chief business officer, on a Tuesday earnings conference call.
Relevance of Ads
On Tuesday, the business highlighted its progress in artificial intelligence (AI), claiming that it had improved the relevance of the ads that customers saw and could even write text for advertisements for brands on its own.
On Wednesday, Meta reiterated this, claiming that it was investing in AI to get advertisers to spend more money on its platforms. Meta said that AI recommendations had increased users’ time on Instagram by 24% in the first quarter.
Wednesday’s after-hours trading saw a 12% increase in Meta shares.
Because of Apple Inc.’s (AAPL.O) privacy improvements, which made it more challenging for Alphabet and Meta lure back advertisers to collect user data for the purpose of serving tailored ads, the social media ad market expanded by 2% last year.
