This Week in Social and Digital (Week of February 3)
This Week in Social is a weekly digest of some of the biggest stories in social media marketing news. These stories are the show notes for the Brave Ad World Podcast. Each story is discussed at a deeper level on the podcast.
YouTube Reveals Revenue Numbers
Alphabet’s earnings did not go as investors had hoped. Total revenue grew to $46.1 billion last quarter, but that didn’t meet expectations. Operating income was also a miss for this report as it has been for nine of the last 10 quarters.
So Alphabet made a bet that it could control a bit of the narrative by revealing information that up until now has been secret, and they were right. We found out just how much ad revenue comes from YouTube, which up until now has just been lumped into Google’s ad revenue. YouTube generated $15.1 billion in 2019 ad revenue, with $4.7 billion being generated in Q4. YouTube generates about 10% of Alphabet’s total revenue. Google retains 45% of that revenue and distributes the rest to publishers and content creators. Most of the ad revenue comes from brand advertising with direct-response growing. Another $3 billion came from ad-free YouTube subscriptions, YouTube Music and YouTube TV.
Both Alphabet and Facebook disappointed investors who had become accustomed to exponential growth in earnings reports this quarter. Sharing YouTube numbers was clearly intended to change the earnings narrative a bit, and the numbers are certainly interesting. YouTube is a massive asset for Alphabet, but it’s also a costly one. YouTube has had to make massive investments in its platform to police content and get YouTube Kids in order, all while being part of a Google-wide antitrust investigation.
Spotify Gets the ESPN of Podcast Networks
Spotify is continuing its podcast network buying spree with the acquisition of Bill Simmons’ The Ringer, which includes more than 30 podcasts along with articles. All of that is supported by more than $15 million in revenue, at least in 2018.
The Ringer is just the latest of podcast acquisitions Spotify has been making over the last year or so. The most notable acquisition until now was the the premium content network Gimlet.
This is actually a pretty big deal as it sets the stage for more competition between Spotify and Apple Music on a few fronts.
First, Spotify has more paying subscribers than Apple Music, but Apple Music via Apple Podcasts is the king when it comes to podcasts. However, that could change. Right now, Spotify’s owned podcast networks are not restricted to Spotify itself. People can listen to most of Spotify’s podcasts on a variety of platforms, even Apple Podcasts, but Spotify’s approach to acquire high-quality podcast networks with built-in audiences could be the precursor to podcast wars. Spotify could lock down its owned podcasts to its platform alone, and drive audiences who love their podcasts to Spotify to listen. That could mean we end up with a podcast environment similar to the what we have today with video streaming, one marked by walled gardens.
Second, Spotify’s taking steps to formalize podcast advertising and making it more measurable and targeted for advertisers. If it can build the audience and build more advertising credibility in the space, it could be a huge win for the platform because, not only will it generate ad revenue, Spotify won’t have to pay royalties as the owner of the content—unlike what it has to do for music.
Facebook Audience Network Discontinues for Mobile Web
Facebook Audience Network support for mobile web and in-stream ads will be discontinued April 11. The ad offering allowed brands to extend their ad campaigns to third-party apps and mobile websites. According to Facebook, the mobile app offering is still going strong and isn’t going away, but extending campaigns to websites will be coming to an end.
It’s difficult to see this decision being made without the influence of GDPR, CCPA, the declining effectiveness of cookies and growing calls for privacy. Browsers are also making ad targeting more difficult by limiting the effectiveness of tools like cookies. Beyond that, Facebook just rolled out the ‘Clear History’ button, enabling users to limit the data sites can collect on users for targeting.
According to Facebook, this particular offering was a very small piece of its business. As for news publishers, the Facebook Audience Network can still be leveraged in Instant Articles.
This is likely the first among many changes to the advertising ecosystem as privacy changes continue to move forward. This move was clearly motivated by the demise of cookies, but Apple and Google may not stop there. If they decide to evaluate mobile advertising IDs, Facebook’s Audience Network could become phased out altogether. If that’s the case, Facebook will focus on offering advertising within its own apps.
News Quick Hits
YouTube and parent-company Google revealed updated policies for handling political disinformation. It’s now barring content that has been edited with the intent to mislead YouTube viewers and could lead to “egregious harm.” It’s also banning conspiracy theories that advance “false claims related to the technical eligibility requirements for current political candidates and sitting elected government officials to serve in the office, such as claims that a candidate is not eligible to hold office based on false information about citizenship status requirements to hold office in that country.” In other words, Google is banning birther conspiracy theories. Lastly, Google is banning misinformation related to voting and the census. These are welcome additions, but what took so long?
Google Chrome is now requiring cookies to implement “SameSite,” a backend protocol that shows how the cookies work and track users. If cookies do not have the protocol, Google will delete the them. Beyond that, Google is requiring all publishers to be secured with HTTPS connections. Failure to do so will result in the removal of any third-party cookies from their sites. Google has announced plans to remove all cookies from its Chrome browser by 2022, so expect this to be the first of many by the tech giant to gain more control over how cookies are leveraged.
YouTube wasn’t the only secret-until-now ad revenue numbers we learned. We also learned through anonymous sources that Instagram brought in $20 billion in ad revenue in 2019, which is about a quarter of Facebook’s revenue for the year. To date, Facebook has only reported revenue from its “family of apps.”
Twitter is starting to blur out deep fake and otherwise manipulated content, while offering explanations that the content may be manipulated. It will proceed with the removal of such content for only the worst offenders that are likely to cause harm.
Snap’s Q4 earnings missed estimates by reporting sales of $560.9 million, just below the projected $562.9 million. The company reported a high net loss due to a $187.5 million settlement from a class-action lawsuit related to the company’s IPO. Snap also noted that it’s been actively investing in talent and its ad platform. This report was a bit of an outlier for Snap, which turned the ship in 2019, recovering after a botched app redesign the year before. Those efforts played out with this report, too as the company was able to report that it now has 218 million daily active users, exceeding expectations of 214 million. While it fell short financially, it was quick to point out investments being made for its future.
As the streaming wars continue, Disney+ revealed its user numbers. It now has 28.6 million subscribers at the end of Q1, beating expectations of 26.5 million and making it 17% the size of Netflix’s user base. Thanks to the bundle with Disney+, ESPN+ grew about 5 million users in the last year and Hulu grew 33% over last year to hit 30.4 million. Aggressive pricing and bundling have been major factors for success.
Speaking of Hulu, Disney plans to expand the platform internationally in 2021. Currently, it’s working on license agreements to do just that. Netflix is growing rapidly internationally, but Hulu has no intention of standing by while it expands further.
Facebook launched it’s one-time notification API for Messenger. The update allows brands to reach out to customers with updates related to their interests like price drop alerts, back in stock alerts and follow-ups. After the first notifications, users have the option to request further notifications in the future or can discontinue further communication.
The latest numbers on ad-blocking are in thanks to a new report from PageFair. Currently 527 million people block ads on mobile globally, which is up 64% since 2016. 236 million desktop users, down 16%, have ad blockers. About 4% of mobile traffic in the United States is made up of users running ad blockers, but this is expected to increase to 6% by 2022. This rise is attributed to mobile ad blocking becoming less of an add-on for users and more of a product feature for browsers like Safari and Firefox.
Twitter had an impressive Q4 earnings report, announcing ad engagements up 29% year-over-year thanks to audience growth and improved click-through-rates. The platform emphasized “health” as being a major focus for the platform multiple times, and to top it all off, it reported its first $1 billion quarter.
Pinterest’s Q4 was strong as well, with revenue up 46% year-over year and monthly active users growing 26% to hit 335 million.