In Q1 of 2023, looking at the big four tech companies’ online advertising revenues, we see a decidedly mixed bag. This variation emphasized the divergent trends occurring in each region and industry. That’s the earnings picture so far for Meta Platforms, Amazon, Microsoft, and Alphabet. These reports serve as an important, industry-leading snapshot of the current state of online ad spending and the roadblocks still ahead.
So did Susan Li, Meta’s finance chief, who described a slowdown in ad spending from Asia-based e-commerce exporters. This drop is presumably due to the future expiration of the de minimis trade loophole. It’s scheduled to expire on May 2, and businesses are already experiencing the effects. That means this change has implications not just for how Asian exporters operate on online advertising platforms, but how they respond to new regulatory actions.
Even with all of the anxiety about Asia-based spending, Meta’s extravagant first-quarter earnings came in higher than anyone anticipated. The company said its ad sales came to $13.92 billion, beating Wall Street’s average projections of $13.74 billion. Ad sales from the Asia-Pacific region fell to $8.22 billion. This was well below the projected $8.42 billion and a major letdown from projections.
Amazon dazzled in the quarterly reports with a stunning 19% year over year growth in online ad revenue. That growth was much more than what analysts had expected. Its IPO valuation really underscores the success of this company and its rapid growth in the digital advertising-first market. It proves its tequila power even in the macro industry turmoil.
Microsoft announced a 15% YOY increase in their search and news advertising revenue at $499 million. This strong and continuous growth is a testament to Microsoft’s ability to capture the increasing demand within its advertising verticals.
Alphabet also reported admirable growth, with its ad sales up 8.5% year over year to $66.89 billion. YouTube played a major role in this growth, with its ad revenue up 10% to $8.93 billion. Alphabet execs are spooked over new headwinds in their Asia-Pacific ad biz. They raise concerns that regional challenges can continue to act as a brake on future growth.
In the time since, these tech giants have all reported stellar earnings for the first quarter. They cautioned that more difficult months could be arriving later this year. Analysts and company executives too have been looking with great interest at the changing advertising landscape and its impact on future revenue growth.
As the industry prepares for shifts in ad spending and regulatory changes, all eyes will be on upcoming earnings reports. Pinterest is set to release its earnings on May 8, which could provide further insights into how tech companies are navigating these developments.