Online ad demand is ‘very strong’: How did tech giants perform in Q2 2021?

After a tumultuous year for advertising in 2020, adspend is booming, and not least on digital platforms. But how do the performances of the major media owners in the tech space compare?

All results for the second quarter refer to the calendar months of April, May and June.

Alphabet (Google)

• Revenue in the second quarter was up 62% year-on-year to $61.9bn (£44.6bn)

• In the second quarter of 2020, when the pandemic had its most severe economic impact, Alphabet’s revenues were roughly flat compared with 2019

• Operating income in Q2 this year was $19.4bn – that’s more than three times the equivalent figure in 2020 ($6.4bn), and more than twice what it was in 2019 ($9.2bn)

• Operating margin was 31%, up from 17% in 2020 and 24% in 2019

• Google’s advertising revenues last quarter came to $50.4bn, which is up 69% on last year, and accounts for 82% of Alphabet’s total revenues

• The fastest growing segment was YouTube advertising, up 84% to $7bn

• The largest segment, Google Search and other advertising, grew 68% to $35.8bn

• By region, Alphabet’s greatest growth in Q2 came in Other Americas (non-US), where revenues were up 83%, followed by EMEA (up 68%), APAC (62%) and the US (57%)

• Across the first six months of the year, Alphabet’s total revenues were up 47% to $117bn

• Alphabet increased its sales and marketing spend 35% in Q2 to $5.3bn.

Philipp Schindler, senior vice-president and chief business officer at Google, said: “Momentum is really strong across both our brand and direct response business on YouTube. On the brand side, the global shift to online video and streaming continues, with more than two billion monthly active users now, and a billion-plus hours of video watched every day. I think we’re at the forefront of this shift. And advertisers have increasingly needed to look beyond linear TV alternatives to achieve their reach and awareness goals.

“Nielsen Total Ad Ratings Reach reporting found, on average, 70% of YouTube’s reach was delivered to an audience not reached by the advertisers’ TV media. So not only are we driving improved reach, but we’re also helping brands do it more efficiently. And as a result of this, you see many advertisers re-evaluating their media mix and increasing their investments in our platforms.

“As far as the direct response part goes, we’re helping advertisers convert intent into action. We try to drive performance at an incredible scale. Take an example, with video action campaigns, which is our next-generation TrueView for Action format, advertisers were getting access to even more inventory across YouTube and our partners, all in a single automated campaign. We’re working really hard to make YouTube not only more actionable but also more shoppable. So YouTube is proving to be meaningful for not just brand-building and reaching a massive audience, but also for converting viewers into buyers.”

Facebook

• Advertising revenues in the second quarter were up 56% to $28.6bn

• In Q2 of 2020, they were up 10% on the previous year

• Facebook’s non-advertising revenues were up 36% to $497m. They account for just 1.7% of total revenues

• Income from operations more than doubled from $6bn to $12.4bn

• Facebook’s operating margin was 43%, up from 32% last year and 27% the year before

• Daily active users and monthly active users on the Facebook platform were both up 7% year-on-year to 1.91 billion and 2.9 billion respectively

• Across the family of platforms – Facebook, Instagram, Messenger and WhatsApp – DAUs and MAUs were each up 12% to 2.76 billion and 3.51 billion. That means 46.5% of the human population are using Facebook’s platforms each month

• The fastest growing region for advertising revenue was Rest of World, at 86%, following by Europe at 63%, APAC at 56%, and the US and Canada at 48%

• Marketing and sales expenditure was up 15% year-on-year to $3.3bn.

Dave Wehner, chief financial officer at Facebook, said: “The macroeconomic environment for online advertising remains very strong. The growth in advertising revenue was largely driven by verticals that have performed well during the pandemic, such as online commerce and consumer packaged goods. In addition, we saw improved growth trends in verticals that were particularly challenged during the pandemic, such as travel, entertainment and media.

“In Q2, the total number of ad impressions served across our services increased 6% and the average price per ad increased 47%. Impression growth was driven primarily by developing markets, especially in Asia-Pacific, while pricing growth benefited from broad-based strength in advertiser demand. Recall that in the second quarter of 2020, the effects of the pandemic contributed to elevated impressions and depressed prices, which we are now lapping.

“We expect that advertising revenue growth will be driven primarily by year-over-year advertising price increases during the rest of 2021. We continue to expect increased ad targeting headwinds in 2021 from regulatory and platform changes, notably the recent [Apple] iOS updates, which we expect to have a more significant impact in the third quarter compared with the second quarter.”

Amazon

• Total net sales in the second quarter were up 27% year-on-year to $113bn

• Sales of services were up 42% to $55.1bn, meaning services now account for almost half (49%) of total revenues

• Sales in Amazon’s “other” segment – which is primarily advertising – were up 87% year-on-year to $7.9bn

• Operating income was up 32% to $7.7bn

• Amazon said its Advertising offering had launched more than 40 new features and self-service capabilities, including:

  • Regional sponsored product campaign creation tools

  • Access to educational, technical, and marketing resources via its Partner Network

  • A simplified creative asset management solution

• Amazon Advertising also expanded the services it offers in Australia, Europe, India, Japan and Saudi Arabia

• Amazon Streaming TV ads and Twitch now jointly reach an audience of 120 million monthly viewers in the US

• Other business initiatives included the Black Business Accelerator, which commits $150m over four years to help black business owners and entrepreneurs succeed as third-party selling partners.

Andy Jassy, who succeeded Jeff Bezos as Amazon CEO in July, said: “Over the past 18 months, our consumer business has been called on to deliver an unprecedented number of items, including PPE, food, and other products that helped communities around the world cope with the difficult circumstances of the pandemic. At the same time, AWS [Amazon Web Services, the cloud-computing arm] has helped so many businesses and governments maintain business continuity, and we’ve seen AWS growth re-accelerate as more companies bring forward plans to transform their businesses and move to the cloud.”

Twitter

• Total revenue in the second quarter was up 74% to $1.19bn

• Advertising revenue was up 87% to $1.05bn, with other revenue up 13% to $137m

• Total ad engagements increased 32%, while cost per engagement was up 42%

• Twitter made a net income of $65.6m, compared with a loss in Q2 2020 of $1.38bn (the majority of which was accounted for by its tax bill)

• Monetizable daily active users, Twitter’s user metric, were up 11% year-on-year to 206 million.

Ned Segal, Twitter’s chief financial officer, said: “We delivered better-than-expected performance across all major products and geographies while growing our audience.

“We continued to make significant progress on our direct response and brand products with updated ad formats, improved measurement and better prediction. We are driving more value for advertisers with our strong push into performance-based advertising and expanded offerings for small and medium-sized businesses.

“We exited March with momentum across both brand and direct response. In April trends continued to improve with ongoing strength throughout the quarter across all major products and geographies.

“A growing audience, better ad products, strong sales execution, global events and advertiser product launches all had a big impact on our performance. The impact of ATT [ad tracking transparency, the privacy feature introduced by Apple in its recent iOS update] on the second quarter was also more muted than we expected, although it’s too early to assess the long-term impact.”

Snap

• Revenue in the second quarter was $982m – up 120% on the previous year

• The company’s operating loss was $192m – 38% lower than in 2020

• Daily active users were up 23% to 293 million

• Sales and marketing expenses were up 36% to $180m.

Jeremi Gorman, chief business officer at Snap, said: “We benefited from a favourable operating environment and continued success with both direct response and large brand advertisers, and we continue to leverage our performance ad products to grow our advertiser base globally. We are fully focused on making progress against our revenue and ARPU [average revenue per user] opportunities, which we believe will be driven by three key priorities. First, driving ROI through measurement, ranking, and optimisation.

“Second, investing in our sales and marketing functions by continuing to train, hire, and build for scale. And third, building innovative ad experiences around video and augmented reality, with a focus on shopping and commerce. Our commitment to these three priorities, along with our unique reach and large, engaged community, allows us to drive performance at scale for businesses around the world.”