Google, Microsoft, LinkedIn, and Meta have all reported increases in advertising revenue, suggesting that ad spend will continue to grow as we enter the holiday season in Q4. Overall, this appears to be a positive indicator for the search ad industry. In this blog, we’ll go over the ad revenue trends from Q3 and explain their significance to the digital advertising landscape.
Ad Revenue Trends by Platform
Alphabet Inc., the parent company of Google, reported a boost in advertising revenue during the third quarter of 2023 compared to the same period last year. Search ad revenue saw an increase of 11.3%, and YouTube ads also contributed to the growth with a 12.5% uptick. While Google’s advertising network experienced a 2.6% dip, it marked an improvement from the 5% loss reported in the second quarter of 2023. This financial data indicates that Google’s revenue growth is beginning stabilize.
Alphabet’s Chief Financial Officer, Ruth Porat, claimed that the growth was primarily fueled by the expansion in Search and YouTube, along with positive developments in the Cloud sector. Despite surpassing analysts’ expectations, the single-digit growth percentage in total ad revenue implies that digital ad spend has yet to fully recover to its previous levels of success. Industry experts anticipate a return to double-digit growth by the final quarter of 2023.
Microsoft has just posted its most robust financial quarter ever in Q3 of 2023. Search and news advertising revenue witnessed a substantial 10% year-on-year increase, excluding the traffic acquisition costs paid to publishers by Microsoft. This surge in Microsoft advertising revenue marks a noteworthy improvement from the previous quarter’s 3% uptick.
LinkedIn Ads also experienced an 8% increase in revenue, contributing to an overall 13% rise in productivity and business processes, reaching $18.6 billion.
Meta’s third-quarter revenue surged by 23% to reach $34.15 billion, signaling a robust recovery in the digital advertising landscape. As the parent company of Instagram, WhatsApp, Threads, and Messenger, Meta Ads reported the following key insights:
- Ads viewed in the quarter witnessed a substantial 31% increase compared to the previous year.
- The average price per ad experienced a modest 6% decrease, marking the smallest decline in seven quarters.
Why We Care
The increase in Q3 ad revenue is a good thing for digital advertising platforms because it allows them to invest their earnings into improving features such as ad targeting and measurement. While this may seem like a positive thing for digital advertisers, increases in ad revenue indicate that ad platforms usually mean more competition and higher prices for advertisers. The rise in prices won’t end here because the cost of advertising will increase with competition during the holiday season.
Wondering how to optimize your digital advertising strategy in the face of rising ad costs?