ad revenue up 12%, ahead of Microsoft and Alphabet

This week’s earnings reports from the big tech companies showed mixed results for digital advertising revenues. Meta’s growth was double-digit in the second quarter 2023. Microsoft and Alphabet both had a near flat performance.

Meta

The winner. Meta’s advertising revenue increased by 12%, to $31.5 billion in YoY. This was higher than analyst expectations. Meta has now returned to double-digit growth since 2021. This helped the Facebook/Instagram/WhatsApp parent company grow total revenue by 11%, to $32 billion, for the quarter.

More engagement equals more money. Meta saw impressive growth in many key engagement metrics:

• Facebook’s daily-active user count (DAU) increased by 5%, to 2,06 billion.
• The number of monthly active users increased 3% year-on-year to 3,03 billion.
• DAU for the “family apps” category (which includes Instagram and WhatsApp) reached 3.07 billion. This represents a 7% YoY increase.
• This category’s monthly active users also increased by 6%, to 3,88 billion.

Less employees means more money. Meta’s impressive performance is the result of a series of cost-cutting initiatives, which included the layoff of more than 21,000 employees. The company also reduced spending in certain divisions and restructured its hierarchy.

Source: MarTech Analysis of Meta Data

Earnings Report. Meta’s full report can be found here.

Microsoft

A distant second-place finish. Microsoft’s advertising revenue and news search revenue grew by 3%, or $86 Million – including the traffic acquisition costs paid to publisher. Microsoft’s advertising and news search revenue increased by 3% or $86 million, including traffic acquisition costs paid to publishers.

Microsoft’s revenue fell “a little behind expectations” because of lower advertising spend.

LinkedIn made a lot of money. Microsoft did not report its revenue (we will update once it does), however, they confirmed that LinkedIn revenue exceeded $15 billion in Microsoft’s fiscal year 2023 for the first-time following a 5 percent increase. The company attributed this increase to the growth of Talent Solutions. Some continued bookings were affected by a weaker hiring climate in key verticals.

These numbers, despite the increase, were still lower than what was forecast, in part due to a decline in Marketing Solutions and also because of lower advertising spend.

Earnings Report. Here is Microsoft’s Q2 Performance Report.

Alphabet

Third place. Alphabet’s parent company Google saw its search revenue rise 2% to $1.85 Billion. YouTube’s ad revenues rose by 4.4%, to $7.67 Billion for the quarter. Google’s advertising revenue fell 5%.

The single-digit growth is a sign that digital advertising has not kept pace with the U.S. economic boom.

Alphabet’s Chief Financial Officer Ruth Porat stated in a press release that “Our financial results show continued resilience in Search with an acceleration in revenue growth both in Search and YouTube.”

Source: MarTech Analysis of Alphabet Data

Full-steam ahead on AI. Google’s Chief Business Officer Philipp Schindler stated that the company would continue to invest heavily into AI.

“Generative AI supercharges new and existing advertising products.” We help advertisers make better decisions, solve issues and boost creativity. “I’m excited about AI,” said he in a press release.

Earnings Report Alphabet’s earnings report can be found here.

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