Google, Meta, and Snap See Advertising Rebounds Fueled by AI
According to recent reports, Google, Meta (formerly known as Facebook), and Snap have reported impressive rebounds in their advertising businesses. This implies the growing influence of artificial intelligence. AI is attracting marketers to digital platforms, even in times of economic downturn.
A subsidiary of Alphabet, Google, experienced a 9.5% increase in ad revenue for the July-September quarter. This surpassed Wall Street's expectations. According to experts, the reason for the success is their investments in AI like Performance Max. This AI tool uses AI to optimize the marketing budgets effectively across Google's ad network. They also witnessed substantial growth in their YouTube ads business, with a 12% jump in revenue.
The parent company of Facebook and Instagram, Meta, saw a 31% increase in ad views compared to the previous year. Though they faced a 6% decrease in average ad prices but it was the slowest in seven quarters. Meta is heavily investing in AI to counteract privacy changes that restrict the use of personal data for ad targeting. They are introducing generative AI tools to create various ad campaign variations.
Snap, the company behind Snapchat, has also reaped rewards from its efforts to enhance ad-targeting tools with technology. These improvements contributed to an increase in the average revenue per user in the third quarter. According to the analysts, Google and Meta benefitted the most from this comeback. Their broader reach and utilization of AI make them more resilient to geopolitical turmoils, such as the Middle East conflicts.
However, Meta's Chief Financial Officer, Susan Li, noted a recent softening in ad spending at the beginning of the fourth quarter, possibly linked to the Israel-Gaza conflict. Media research and investment firm Magna has raised its forecast for U.S. ad spending growth to 5.2% for 2023, up from 4.2%. Digital ad sales are expected to increase by 9.6% during this period.