Huge Tech dodged the ache within the second quarter with Apple’s advert privateness adjustments
The logos of Google, Apple, Facebook, Amazon and Microsoft are displayed on a cellphone and a laptop screen.
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All eyes were on the potential negative impact of Apple’s recent privacy changes on tech stocks over the past week, but earnings from companies like Facebook and Snap showed they were able to handle any aftermath of a surge in digital ad spend .
But as businesses move into the second half of the year, they face a tougher comparison period and tougher impact from Apple’s privacy changes that give users more visibility and control over apps they want to track for advertisements.
JP Morgan analysts pointed out that “every online advertising company is significant [year-over-year deceleration]“In the second half of 2021.
In the meantime, the ongoing shift in advertising spending to digital channels can help mitigate these factors as a global economic recovery drives huge demand for digital advertising. As Wedbush analysts put it, the digital advertising market is “scorching hot”.
That’s what Wall Street says about Apple’s impact on the big tech advertising companies in the second quarter.
Facebook said the third quarter could see the worst impact Apple’s changes had on its earnings. But Oppenheimer analysts seemed to be ignoring management’s warning that second-half revenue would “modestly” slow, saying that higher spending on advertising and secular trends should outweigh the impact of Apple’s changes.
Though Facebook didn’t name the number of opt-outs it saw, analysts pointed to management’s comments that the impact was in line with Facebook’s expectations and history of giving a cautious outlook.
“The outlook was a trigger by using adverbs that pointed to a ‘significant’ slowdown in growth and explicitly called against the IDFA headwind,” said Bernstein analysts in a statement on Thursday. “Though the math on a 2-year stack shows only a modest slowdown in growth and IDFA’s headwinds were known and worked into the numbers. If you add it all up, we’re back to where FB did last Friday.”
Morgan Stanley analysts noted that “the impact and opt-in rates have been largely as expected, alternatives are being implemented, and the strong advertising market partially offsets any setbacks from individual advertisers.”
Delays in the rollout have also given the platforms more time to develop solutions for advertisers such as alternative measurement offerings.
Snap and Twitter
Snap executives said the company saw the opt-in rates for Apple’s prompts over reports in the press and analyst community, but warned it was early days to measure the full impact of the changes.
Jefferies analysts said they believe Snap’s third quarter revenue guidance is conservative, in part because street estimates have the potentially negative impact of the privacy change it estimates as “minimal”.
Twitter said in its letter to shareholders that the tracking-related changes in Apple’s iOS 14.5 version were less than expected.
Cowen analysts said that since branding makes up about 85% of Twitter’s business, the propensity for branding helps protect them from the impact of the iOS 14.5 changes. That’s “compared to [direct-response] Advertising where conversion data is more important, “they wrote.
Google and Amazon
Google appears to be a short-term beneficiary of the impact of the Apple changes. MKM Partners said its reviews and industry talks show that smaller advertisers are meanwhile shifting advertising money towards Android apps as attribution and measurement challenges arise on iOS.
“We continue to believe that Google will remain a short-term beneficiary of the iOS-related ad targeting headwinds as advertisers prefer to shift budgets to AdMob and Ad Manager,” Bernstein analysts write. “We expect this tailwind to normalize at some point, but with the adoption of iOS 14.6 growing in June, we believe this strength could continue into the third quarter.”
Amazon, which was not expected to have that much impact on Apple’s changes, saw a remarkable 87% year-over-year growth in its advertising business in the second quarter. Given its strong first-party relationship with consumers, the company appears well-equipped to cope with the privacy-related changes that are affecting the digital advertising world.
– CNBC’s Michael Bloom contributed to the coverage.