AI’s ad market boost
In late June, WPP’s media business GroupM offered more optimism with a 5.9% growth prediction for advertising revenue for the year to $874.5 billion and a further 6% increase next year (not including political advertising). This is a mixed story from country to country, but the U.S. was predicted to have 5.1% growth to $322.5 billion, with the U.K. growing at 4.8%, China at 7.9%, Germany at 6% and France at 4.2% to highlight a few.
Kate Scott Dawkins, president of GroupM’s Business Intelligence unit, said the impact of AI on the ad market is starting to be felt.
“It touches everything. It’s so pervasive already,” she said. “There is so much here that is going to be developing the way of working into the future.”
Tech platforms are bouncing back
Microsoft
Microsoft posted an 8% increase in revenue at $56.2 billion for its fourth quarter and a 7% increase for the year with $211.9 billion, citing the demand by customers for additional AI support through Microsoft Cloud support which itself drove revenue of $30.3 billion (+21%) with further growth predicted.
For the year, Microsoft recorded an increase in sales and marketing spend to $22.759 billion, up from $21.825 billion in 2022.
Alphabet
Alphabet saw a 7% rise in revenue to $74.6 billion. YouTube revenue was up 4.4% to $7.7 billion. Google Cloud was up +27% to $8 billion, ahead of expectations. Search advertising again took the lion’s share up 3.3% to $58.1 billion.
Overall Google Advertising, Search and Other revenues were up 5% to $42.6 billion with YouTube Ads growing 4% due to a resurgence in brand advertising and direct response.
Speaking during its results call, Sundar Pichai, CEO of Alphabet and Google said that the business was testing and evolving placements and formats and using generative AI technology to improve advertiser performance.
“Ads will continue to play an important role in this new search experience,” added Pichai. “Many of these new queries are inherently commercial in nature.”
Meta
In its second quarter earnings, during its “Year of Efficiency,” Meta reported that across its family of apps, including Facebook, Instagram, Messenger and WhatsApp, advertising revenue was $31.498 billion (up from $28.152 billion during the same period the year before.)
