The second quarter of 2023 bore witness to mixed outcomes in digital ad revenues for the tech giants. Meta emerged as the winner with double-digit growth, whereas Microsoft and Alphabet experienced almost flat growth rates.

Meta: The Front Runner

Meta’s ad revenue soared by 12% to a staggering $31.5 billion YoY, a performance that surpassed analyst expectations and marked a return to double-digit growth for the first time since 2021. This significant surge led to an 11% increase in Meta’s total revenue for the quarter, totaling $32 billion.

A considerable boost in key engagement metrics contributed to Meta’s impressive earnings. The daily active user (DAU) count for Facebook rose by 5%, reaching 2.06 billion. Monthly active users also swelled by 3% YoY, hitting 3.03 billion. The “family of apps” category, which encompasses Instagram and WhatsApp, saw an increase of 7% in DAU, amounting to 3.07 billion. The monthly active users in this category also experienced a growth of 6%, reaching 3.88 billion.

Notably, Meta’s strong financial performance follows a series of cost-reducing strategies, including layoffs of over 21,000 staff members and restructuring the company’s hierarchy.

Access Meta’s complete report here.

Microsoft: Close, But No Cigar

Microsoft experienced a marginal increase in its advertising and news search revenue, with a 3% or $86 million increase, inclusive of traffic acquisition costs paid to publishers. When accounting for these costs, the revenue growth stood at 8%.

The rise is attributed to increased search volume and the acquisition of Xandr, an ad-buying platform from AT&T. However, Microsoft admitted its revenue fell “a bit behind expectations” due to diminished ad spending.

Microsoft’s LinkedIn platform demonstrated significant growth, crossing the $15 billion mark for the first time in Microsoft’s 2023 fiscal year after a 5% increase. The company credited this to growth in Talent Solutions, although the weaker hiring environment in key verticals impacted some bookings.

Despite these gains, the figures were below forecasts due to a decline in Marketing Solutions, again resulting from lower ad spending.

Microsoft’s Q2 performance report is available here.

Alphabet: Digital Ad Spend Lags Behind

Alphabet, the parent company of Google, saw a 2% increase in search revenue, bringing it to $1.85 billion. YouTube ad revenue also witnessed a 4.4% rise, totaling $7.67 billion for the quarter. However, Google’s advertising network revenue saw a 5% decrease.

Despite surpassing analyst expectations, the single-digit growth suggests that digital ad spending hasn’t kept pace with the robust U.S. economy. “Our financial results reflect continued resilience in Search, with an acceleration of revenue growth in both Search and YouTube,” said Alphabet Chief Financial Officer Ruth Porat.

Google Chief Business Officer Philipp Schindler stated the company’s commitment to continued heavy investment in AI, especially Generative AI, to enhance ad products and decision-making capabilities for advertisers.

Find Alphabet’s full report here.

In summary, Q2 2023 has been a mixed bag for these tech behemoths. While Meta saw a healthy increase in ad revenue, Microsoft and Alphabet didn’t fare as well. The key takeaway is that despite the overall economic health, the digital ad spend is yet to catch up, presenting a challenge and an opportunity for B2B marketers.

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