Pixel Envy

Written by Nick Heer.

The Online Advertising Duopoly Reports Massive Earnings

Jennifer Elias, CNBC:

Alphabet reported Q2 2021 earnings after the bell. The stock rose more than 3% after hours on the strong numbers, which crushed analyst expectations.

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Total Google ad revenue increased to $50.44 billion, up 69% from the year-ago quarter, which was hurt by the onset of the Covid pandemic.

Tripp Mickle, Wall Street Journal:

Google’s parent company flexed its digital dominance, reporting its highest quarter ever for sales and profit behind a gusher of online advertising from businesses vying for customers across reopened economies.

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Other tech companies have benefited from a soaring digital ad market. Snap Inc. last week reported revenue more than doubled behind strong user growth, while Twitter Inc. reported sales surged 74% behind increased advertising.

Facebook:

Advertising revenue growth in the second quarter of 2021 was driven by a 47% year-over-year increase in the average price per ad and a 6% increase in the number of ads delivered. Similar to the second quarter, we expect that advertising revenue growth will be driven primarily by year-over-year advertising price increases during the rest of 2021.

Elizabeth Culliford and Nivedita Balu, Reuters:

Facebook Inc said on Wednesday it expects revenue growth to “decelerate significantly,” sending the social media giant’s shares down 3.5% in extended trading even as it reported strong ad sales.

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Facebook said it expects Apple’s recent update to its iOS operating system to impact its ability to target ads and therefore ad revenue in the third quarter. The iPhone maker’s privacy changes make it harder for apps to track users and restrict advertisers from accessing valuable data for targeting ads.

Facebook said much the same thing in its earnings press release last quarter. Perhaps its advertising revenues will begin to be impacted by App Tracking Transparency after all, but it seems likely that the feature will benefit the online advertising duopoly. In this riskier climate, advertisers seem to be favouring the known quantities of Google and Facebook. I will repeat what I wrote in April:

As is often the case for stories about privacy changes — whether regulatory or at a platform level — much of the coverage about App Tracking Transparency has been centred around its potential effects on the giants of the industry: Amazon, Facebook, and Google. But this may actually have a greater impact on smaller ad tech companies and data brokers. That is fine; I have repeatedly highlighted the surreptitious danger of these companies that are not household names. But Facebook and Google can adapt and avoid major hits to their businesses because they are massive — and they may, as Zuckerberg said, do even better. They are certainly charging more for ads.

Privacy should not be something that users must buy, nor should its violation be a key selling point. Privacy is something that should be there, for all of us, regardless of the device we use, the websites we visit, or the ad tech networks we unknowingly interact with.