Big tech’s Q4 earnings: reasons for media buyers to be cautiously optimistic
iCrossing’s James Mortimer takes a magnifying glass to the earnings reports of Meta, Snap and Pinterest, finding reasons for optimism amid well-known jitters in the tech world.
iCrossing's James Mortimer finds good news in social media giants’ recent earnings reports / Fabian Blank via Unsplash
With the global economic downturn causing layoffs across the tech industry, the Q4 earnings reports from the major media suppliers were anticipated with nerves and trepidation. But it wasn’t all doom and gloom; these reports contain reasons to be optimistic, not least from a media planning and buying perspective.
Meta’s share price jumped 20% after it released its latest earnings report. The Facebook parent exceeded expectations with only a 4% drop in revenue. Previously, Meta had warned that Q4 revenue could be down as much as 10%. The situation wasn’t as bad as initially feared.
Meta’s overall user base has continued to grow; it now has 2 billion daily active users, compared with 1.98 billion in Q3. Looking forward, Meta chief financial officer Susan Li said the company expects Q1 ad revenues to hit $26–28.5bn (in Q1 2022, ad sales were $27.9bn).
Clearly, Meta’s advertising product is still generating tremendous value for brands globally. Although there is now more competition (from TikTok and Amazon in particular), there are still huge opportunities to generate value on the platform.
Over the last year, Meta has doubled down on their investments in AI. Zuckerberg credited the company’s developments in this area with the increase in user numbers, specifically with Reels: “The progress we’re making on our AI discovery engine and Reels are major drivers of this.” This point further reinforced the requirement to invest in 9:16 short video content.
While paid media offerings from other large suppliers have helped diversify the paid media space and pull budgets away from Meta, the OG social platform is still delivering tremendous value, offering the biggest (and still growing) reach.
Snapchat also reported an increased user base: up 17% year-on-year, bringing daily active users to 375 million in Q4. This increased scale helped publishers reach more users with both organic and paid content.
Evan Spiegel noted that more than 60 million Snapchat users watched content around the World Cup in Q4; 17 content partners were able to reach over 50 million global viewers during the last three months of 2022.
In the last few years, Snap has focused its investments on augmented reality (not virtual reality, which Meta has doubled down on). There are considerable gains available to Snap in the short-to-medium term (2-5 years,) since VR headset adaption is so low and AR can be executed effectively with a smartphone.
Snap’s earnings call announced that over 300,000 creators have made AR lenses. In Lense Studio, a lens personalization platform, new functionality is available to build wristwear and earring try-ons. Using it, jewelry brands can create AR lenses allowing users to visualize products without visiting a store. The press release from the call included some impressive stats on these lenses: Luxottica Sunglass Hut has generated over 14m try-ons.
Demand for AR integration is growing fast, fueled by Snap’s innovations. E-commerce brands selling products that people wear or use in the home should be investing in Lenses to make their products easy to try on at home.
Snapchat is becoming more appealing to media buyers and marketers.
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Pinterest’s earnings report highlights revenue growth and increased daily active users. CEO Bill Ready said, “We’re building upon this foundation by staying focused on growing monetization per user, integrating shopping throughout the core user experience”.
The earnings call’s opening statements focused on Pinterest’s adaptation, facing economic headwinds and the impact of Apple’s iOS updates.
The platform’s shopping offering is a great tool for e-commerce brands as new customer acquisition costs become more expensive across the paid media ecosystem. Going forward, if Pinterest can own the point-of-sale transaction on its own platform, it’ll have a silver bullet to its own attribution (which Instagram has been chasing for years).
Live shopping has already gained significant popularity in Asia on apps like TikTok and WeChat. In Europe and the US, this trend hasn’t yet taken hold of users' imaginations. Pinterest aims to change that with its own live-streamed shopping product.
User growth and increased revenues are signs that the platform is generating value for brands operating on it already. Shopping is becoming a bigger and more important service, integrated across Pinterest’s products. E-commerce brands stand to gain by leveraging these products – in the long term, Pinterest could provide a robust solution for attribution.
Facing the headwinds
At the start of 2023, brands face significant headwinds and challenges outside of their control. But there are reasons to be optimistic about opportunities for the year ahead.
New frontiers are emerging; AR and VR offer unlimited opportunities for brands to reach users in innovative new ways and drive growth. The lack of clarity around attribution has slowed development for many brands that heavily relied on paid media as a growth pillar. But major platforms, especially Pinterest, are developing solutions to make attribution clearer. This, in turn, should aid growth and make it easier for brands to understand the value of their media investments.
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