Daily Brief: Snap And Twitter Prove There’s Life In The Old Digital Ad Market Yet

Daily Brief: Snap And Twitter Prove There’s Life In The Old Digital Ad Market Yet

over 2 years ago3 mins

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All eyes were on Snap Inc. and Twitter late last week, as the social media giants’ digital ad businesses drove quarterly earnings that blew past expectations.

What does this mean?

Here’s something to make you feel old: 293 million people were using Snapchat – Snapchatting? Snapping? – on an average day last quarter, up nearly 5% from the quarter before. It’s these users Snap sells to an advertising market that’s in fine form compared to the same time last year, so it stands to reason that the company saw its revenue more than double from back then.

Twitter likewise benefited from the resurgent ad market, and the company saw its revenue climb a better-than-expected 74% versus the same period last year – its biggest jump since 2014. The company also made revenue forecasts for this quarter that were higher than expected, which might have something to do with the company’s recently launched subscription service, Twitter Blue.

Source: The Wall Street Journal

Why should I care?

For markets: Investors have heard enough.

If investors took one thing from both companies’ announcements, it’s that digital ad spending is back in full swing. So while Snap and Twitter’s stock prices initially jumped 15% and 5% respectively on Friday, its ad-dependent rivals have reaped the rewards before they’ve even arrived at their updates: investors sent Facebook and Google-parent Alphabet’s shares higher on Friday.

Digital advertising

The bigger picture: Apple hasn’t killed the digital ad star.

It’s not just the pandemic that’s upended the digital ad market: Apple’s recent privacy changes have made it much harder to match the right ads to the right users. But both Snap and Twitter said the impact was actually lower than they’d anticipated, primarily because iOS users have either been slow to update their devices or surprisingly willing to opt in to ad tracking. That should help reassure investors’ that Apple’s meddling hasn’t caused irreparable damage to the digital ad market.

Keep reading for our next story...

Business Activity In The Eurozone Climbed At Its Fastest Rate In 21 Years

EU image

Data out on Friday showed European business activity climbed at its fastest rate in 21 years in July, but the shortage-riddled manufacturing sector is still missing that special something.

What does this mean?

Monthly business activity surveys ask company managers how busy they’ve been compared to the month before, providing a near real-time snapshot of economic performance. And there was some much-needed good news for the eurozone, whose better-than-expected growth was driven by a services industry that saw activity levels hit a 15-year high. But where restaurants, bars, and the like have been living la vida loca, the region’s manufacturing sector is still hamstrung by the lingering effects of the pandemic: it reported a slowdown in growth on the back of supply chain delays.


Why should I care?

The bigger picture: Someone’s going to pay for this.

Supply disruption has been one of the biggest stories of the year. See, demand for just about everything is surging as economies bounce back, but the scramble to ramp up production has led to shortages across multiple industries – with microchips the highest-profile example. The resulting squeeze is driving up costs for businesses, and encouraging many of them to raise prices on their customers to make up the shortfall. Case in point: Friday’s survey showed firms’ selling prices rose at a near-record pace in July, which won’t do much to put inflation-wary investors’ minds at rest.

Output prices

For markets: Everybody hurts.

The struggle became even more real last week when Unilever warned that the prices of the materials it uses are climbing at their fastest pace in more than a decade. That’s forced the consumer staples giant to scale back its profit targets for the year, and unimpressed investors sent its shares down almost 6%. But Unilever isn’t a one-off: its warning comes a month after rival Procter & Gamble said higher commodity and transport prices will add $600 million to the company’s costs this year.



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