Digital advertising growth has been gaining steam for the last twenty years and now has budgets larger than traditional, offline advertising. In today’s post, Skai’s Senior Director of Marketing Research, Chris Costello, shares his point-of-view on news cycles vs. reality when it comes to the strength of this industry.
I’m going to share a few recent headlines with you. See if you can tell what they have in common with regards to digital advertising growth:
- Facebook reports better than expected second-quarter results (CNBC, 7/24/2019)
- Alphabet earnings show Google revenue growth rebounding, stock pops higher (MarketWatch, 7/26/2019)
- Pinterest shares surge 16% on big revenue jump (MarketWatch, 8/2/2019)
- Snap’s stock jumps almost 12% after beating Wall Street’s expectations for Q2 2019 (Business Insider, July 23, 2019)
- Twitter Q2 Revenues Up, Monetizable Daily Active Users Increase To 139 Million (Tech Times, 7/29/2019)
If you guessed “financial analysts are consistently really conservative when predicting digital advertising growth” then you’re almost as cynical as I am. But no, the common thread is that digital advertising publishers had a really strong second quarter, beating market expectations in almost every case.
To be fair, this was not necessarily an obvious outcome.
Facebook has been facing questions as users shift their behavior towards Stories formats—something that the company explicitly called out as a possible drag on growth at this time last year. Google had a somewhat unexpected slowdown last quarter which some analysts thought might be a sign of a new downward trend. Twitter and Snap have faced ongoing struggles to find their footing as reliable advertising publishers, and Pinterest is only on their second quarterly earnings statement since going public earlier this year.
Digital advertising is strong and growing stronger
Right down the line, however, each of these companies has managed to prove the critics wrong and demonstrate their increasing value to the digital advertising community. Whether it’s due to the increasing diversification of Direct-to-Consumer (D2C) advertisers, new ad formats, better optimization options, or advertisers continuing to expand their existing programs, digital ads continue to grow at a steady clip. In fact this year, for the first time, digital ad spending in the US will exceed traditional ad spending, according to eMarketer’s latest forecast.
For those of us with “boots on the ground” in the industry, I think we intuitively know that digital advertising growth isn’t necessarily affected by news cycles. It’s about the results, right? The other common storyline that these quarterly results may pour some cold water on is that the growth of one company in the ecosystem has to come at the expense of others. Clearly, there is room for several players to find success, otherwise, one of these companies would have had to get the short end of the stick.
Living here in Chicago, I often go back to the basic principle of the Second City school of comedy. It’s not “this or that,” but rather, “yes, and.” We work in a funny business sometimes, so taking cues from actual funny business seems appropriate.
Another common thread across several of these stories is that three of the five companies cited here—Google, Facebook, and Pinterest—are subjects in our most recent Quarterly Trends Report. We even explicitly called out that we didn’t see any evidence that the signs of weakness that had Wall Street concerned were having any noticeable impact on digital advertising growth.
Every quarter, Skai digs into the billions of dollars flowing through our platform across multiple digital ad publishers and extracts the most meaningful insights, whether you are a marketer or an analyst watching the online marketing space. You can find those reports at our Digital Research Hub and always look to the Skai Blog and case studies pages for the latest and greatest findings that don’t necessarily fit into the quarterly report.
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