Meta, Google and Amazon saw ad revenue soar, thanks to AI and ad tech

The internet ad giants are raking in advertising money, with rising marketing interest in their AI ad products, but at the same time Meta, Google and other tech companies are not spending as much on marketing, which has been a source of frustration in the broader industry. In the past week, Google, Meta and Amazon all reported their third-quarter results, which showed mostly healthy growth from Facebook to YouTube ads. Meanwhile, holding company WPP cited tech advertising as a soft spot in the market when it reported earnings this week, saying that sector was spending 13% less compared to the same time last year. “That’s a problem for some agencies dependent on those kinds of tech advertisers,” said Brian Wieser, founder of market research firm Madison and Wall. Meta, during its earnings call, said that it cut back 24% on marketing and sales, year over year. Meta CEO Mark Zuckerberg started the year calling 2023 the “year of efficiency,” which meant layoffs and other cutbacks, while the company still invests heavily in Reality Labs, its advanced internet and metaverse division. Meta also is investing in AI and automation to focus on ads across Facebook, Instagram and messaging apps. That appears to be working: Meta generated $33.6 billion in advertising revenue in the third quarter, up from $27.2 billion last year, a 23% increase. Google and Amazon also saw advertising on their platforms pick up, and that was in part due to the interest in AI tools that marketers are using to take over their campaign planning, creation, targeting and measurement, Wieser said. Ad Age World’s Largest Advertisers 2023 Ad spending, rankings and analysis for the top 100 advertisers Click here Coca-Cola, which has been one of the most aggressive brands to adopt AI in its marketing plan, noted its interest in the technology during its quarterly report this week. “We’re implementing generative AI to improve access to insight, market data, research and trends,” Coca-Cola CEO James Quincey said during a call with analysts this week. Recent news: Coca-Cola introduces AI-inspired flavor Here is a look at the trends affecting tech and advertising, from earnings this week. Meta One of Meta’s bright spots was Advantage+, an AI-based ad product that automates campaigns. The product is similar to Google’s Performance Max campaigns; they both take control from marketers and give it to AI to decide where best to place ads. “Advertisers are more than willing to take non-transparency,” Wieser said, referring to their acceptance of AI managing campaigns with less visibility into how that process works. “They say they don’t like it but what we see advertisers doing is something different.” Meta’s Advantage+ ad platform is on a $10 billion annual revenue run rate, Susan Li, Meta’s chief financial officer said, during the company’s earnings call on Wednesday. Also, Meta saw a boost out of China, likely from fast-fashion sites such as Temu, according to Wieser. “Within ad revenue, the online commerce vertical was the largest contributor to year-over-year growth, followed by CPG and gaming,” Li said. “Online commerce and gaming benefited from strong spend among advertisers in China reaching customers in other markets.” World’s Largest Advertisers: Top spenders by category and country Lastly, Zuckerberg gave an update on Threads, the X rival launched through Instagram last quarter. The app now has “just under” 100 million active monthly users, Zuckerberg said. Google YouTube is back on the upswing, pulling in $8 billion in ad revenue in the third quarter, up 12.5% from a year earlier. The video property had been a little stagnant, with shrinking ad revenue from the end of 2022 through the first quarter of 2023, before showing a gain in the second quarter and a sharper uptick in the recent third quarter. Also, Shorts, the TikTok-style vertical videos, are now at 70 billion views a day, up from 50 billion in the second quarter. Overall, Google’s ad revenue rose 9.5% year over year, to $59.6 billion. The company is making the shift to generative AI ad products like Meta, Amazon and Microsoft are doing, and it has more machine learning powering campaigns such as Performance Max, which takes brands’ assets and runs them across search, YouTube, Gmail and Maps. Philipp Schindler, Google’s chief business officer, highlighted Demand Gen ads, which also incorporate generative AI into ad creation and rolled out widely this month. “It combines video and image ads in one campaign, with access to 3 billion users across YouTube and Google,” Schindler said, “and the ability to optimize and measure across the funnel using Google AI. Demand Gen is already driving success for brands like Samsung and Toyota.” Read about Google’s latest update to PMax ad campaigns Advertisers are seeing lower CPMs, cost per thousand impressions on Meta and Google, compared to last year, said Calla Murphy, VP of digital strategy and integrated marketing at Belardi Wong, the performance marketing agency, which she attributed to the better AI. Meta discussed the decrease in ad prices in its earnings release: “In the third quarter of 2023, ad impressions delivered across our Family of Apps increased by 31% year-over-year and the average price per ad decreased by 6% year-over-year,” the company said. “Google and Meta are still the core digital platforms, that’s where the bulk of spending is going,” said Murphy. Belardi Wong runs marketing campaigns for 300-plus brands and has been helping those clients transition to AI ad campaigns on Google and Meta. TikTok, too, is growing as a significant channel, Murphy said. TikTok, owned by Chinese-based ByteDance, does not publicly report ad revenue. Recent news: TikTok opens search ads to all advertisers Check out the latest Ad Age events and award programs Amazon Amazon pulled in $12 billion in advertising revenue in the third quarter, up from $9.5 billion in the third quarter of 2022, a 26% increase. (Amazon, meanwhile, is the world’s largest advertiser, having spent $20.6 billion last year, according to Ad Age Datacenter.) Amazon has been investing in generative AI, too, launching a new ad creation tool, similar to ones from Meta and Google, which builds the assets for marketers to run across Amazon. This week, Amazon hosted UnBoxed, its yearly ad conference, where it talked about AI and ad tech. Amazon made improvements to its demand-side platform and built an Amazon Publisher Cloud, which launched with partners, including NBCUniversal, Dotdash Meredith and DirecTV. The new platform is a data clean room for marketers and publishers to match data and target ads on the internet and connected TVs. Amazon also has been in the market, talking with ad agencies about its new Prime Video ad business, which it has said will tap into 115 million viewers in the U.S. The Prime Video ads are an outgrowth of what Amazon already did with “Thursday Night Football,” which it started streaming last year offering advertisers live sports commercials. “We’re doing much better on the advertising side than we did in our first year, and that’s a property that’s really valuable,” Amazon CEO Andy Jassy said during the company’s earnings call, noting that the Prime Video game is the only Thursday game of the week. “Advertisers want to be in front of customers because there’s 13 million customers a week watching.” Total third-quarter sales through Amazon’s e-commerce empire rose 13% to $143.1 billion. Jassy also noted how Amazon is investing in machine learning to tie all the ad products together for better targeting and results. Also, at the end of last quarter, Amazon announced a key deal with publishers, including Pinterest and Buzzfeed, to allow Amazon Ads customers to run automated campaigns on third-party websites, which Jassy referenced during the company’s earnings call on Thursday.

Meta, Google and Amazon saw ad revenue soar, thanks to AI and ad tech

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