Facebook and Google report strong Q1 growth

But Facebook anticipates significant deceleration triggered by ATT and is building capabilities around the likely signal loss.

Following a year that saw audiences online more than ever, both Facebook and Google reported strong first quarter earnings anchored by ad revenue growth reflecting continued consumer spending online, with the former acknowledging a likely slowdown as a result of Apple’s iOS 14.5 update and roll out of the App Tracking Transparency (ATT) framework.

Facebook, which released its financial results for the first three months of 2021 yesterday, saw a 46% increase in advertising revenue (42% in Canada and the U.S.) compared to the same period last year, which included a 30% year-over-year increase in the average price per ad and a 12% increase in the number of ads delivered. Both daily (1.88 billion) and monthly (2.85 billion) active users on the platform increased by 8% and 10%, respectively, for the month of March.

While earnings were strong, the platform anticipates Apple’s ATT privacy measures will start having an effect on ad revenue almost immediately. That, along with a year of pandemic-inflated growth and additional “ad targeting headwinds” in the form of continued regulatory and platform changes, will see a significant revenue slow down across the third and fourth quarters of the year.

In an earnings call, Sheryl Sandberg, Facebook’s COO, acknowledged the challenges to personalized advertising, noting that the platform is actively working with clients to implement Apple’s API and Facebook’s own measurement API to mitigate the effects of ATT, noting a rebuild of its ad tech so that the platform can perform based on access to less data, along with long-term collaborations with industry bodies like W3C on privacy-enhancing technologies that can both provide personalized experiences while limiting access to personal information.

There was also a continued call for consumer education around the benefits of personalized advertising for both users and businesses, reflected in Facebook’s recent announcement regarding new “educational” screens informing users how and why it uses data for personalized ads.

Facebook also recently launched new topic-based targeting options within In-Stream video ad units, and announced that it was testing Instagram Reels Ads and other ad experiences in Facebook Stories, all designed to help increase opportunities for brands to better engage with relevant audiences. And while the announcement didn’t specifically speak to the platform’s position around Apple’s ATT, the new capabilities appear to rely less on IDFA measures.

Google’s ad revenue grows as retail prepares to reopen

Google also released its earnings for the first quarter of 2021 this week, reporting revenues from Search and other advertising of $31.9 billion, up 30% compared to last year.

YouTube advertising hit $6 billion, up 49%, driven by direct response and ongoing strength in brand advertising, and advertisers doubled on TrueView for Action ads over the past year, with Google noting an increase in ad mix activity across awareness and action-oriented formats.

On the earnings call, the company says retail led its search channel, along with strong performance in tech and CPG categories. While this is partially due to retailers preparing to reopen as vaccination pushes progress in major markets like the U.S., the company also noted it was seeing more and more SMB advertisers trying to take advantage of audience exposure online.

Philipp Schindler, SVP and CBO, Google, pointed to some new trends on the call, indicating that travel was experiencing renewed interest. In response, Google made it free for hotel and travel companies to list their booking links like it did last year for retail product listings, giving users more choice, and advertisers the ability to amplify paid campaigns with free listings.

Google News Showcase was also called out, reporting over 600 publishers in 12 countries signing up to the program


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