Essential Fourth-Quarter Stats for Ad Tech and Platforms

The ups and downs of various industry leaders

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How ad-tech companies and platforms performed in Q4 2019. Getty Images
Headshot of Matthew Scott Goldstein

Editor’s note: Adweek worked with Matthew Scott Goldstein, a consultant with a deep knowledge of the media industry, to craft his quarterly newsletter into an Adweek article. Through his findings on various industry earnings calls, we’re bringing you insights about how your favorite brands, agencies, media companies, publishers and tech companies are performing on a quarterly basis. His goal was to go past what the trades were focusing on, which mostly revolved around revenue, and tap into the nitty-gritty data shared on these calls.

This iteration focuses specifically on ad tech and platforms in the 2019 fourth quarter.

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  • Criteo: We believe the industry is long overdue in replacing cookies as the technique used to personalize ad targeting on the web, and we welcome concerted industry efforts to evolve beyond cookies in privacy-safe ways. We’re very well positioned for this shift. We have strong capabilities that put us ahead of the identity changes. All our solutions are developed in privacy-by-design ways and operate strictly under the consent of the user. We have an unrivaled ID graph; 95% of our 2-billion-plus IDs in the graph already contain a significant number of non-cookie identifiers. We can make our graph even more flexible by adding more persistent identifiers and new identification capabilities through trusted partners. This makes our ID graph even less cookie-dependent over time and, added to the first point, a massive source of identity data. Accelerate our initiatives to build out a differentiated full-stack DSP, adding capabilities for upper-funnel marketing on top of our strengths in lower funnel, and offering more flexibility and transparency throughout the stack. Slow start that we’ve seen in the first quarter. We added 280 net new clients, ending the quarter with more than 20,200 clients globally, a 4% increase year over year, while maintaining high retention at 90% for all solutions. And from a supply standpoint, more than 4,500 direct publishers are now connected to one of our Criteo Direct Bidders on web and app.
  • The Trade Desk: Total spend on our platform in 2019 was a record $3.1 billion. While advertising is about $725 billion today, we expect it to pass $1 trillion in about seven years. Became the first DSP to go live with FreeWheel’s unified yield products. This is effectively header bidding for TV. Even though the cookie-based internet does not represent the bulk of our business and is certainly not part of the faster-growing segments of our business like CTV or mobile in-application, it’s important. Google is in a tough position; if they were to get rid of targeted advertising for everyone else, then I think they have an antitrust problem. If they were to not do anything, then I think they have a privacy problem. So I think they’re just trying to figure out what’s the right thing to do with both of those. And in a very Google-like way, they’re going to try to engineer their way into something that’s better. We think video in all of its forms will be about half the $1 trillion advertising pie. We predict that CTV will be the quantum leap forward that eventually forces all walled gardens to change course. While the economics of CTV are putting pressure on walled gardens, so is the state of the privacy debate.
  • Rubicon: Ad spend for the year came in at $1.12 billion versus $992 million in 2018, representing a growth rate of 13%. Take rate for the full year was 14%, which is slightly higher than the last take rate we reported of 13.8% in the fourth quarter of 2018. Been operating in a cookie-less world for over two-thirds of our inventory for some time, as you know, in mobile apps and in other forms of media that cookies aren’t being used, and, therefore, we’ve been able to figure out with our buyers how to monetize that inventory. Demand Manager with 86 live contracts. Revenue is not yet material and our plan is to steadily grow it in 2020. We expect Demand Manager revenue to exceed $5 million in 2020. The current fee structure includes fees based on total spend that the tool manages and on average are in the low single digits. Our fee structure also includes CPM-based pricing. Specifically in server-side header, publishers will need to decide whether to further invest in additional engineering talent and additional serving costs on their own or choose Demand Manager.
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  • Snap: Platform is still extremely undermonetized, given our massive reach among a differentiated and growing community, the high levels of engagement on our service and our proven advertising products that drive measurable ROI for our partners. This means that we have a large volume of high-quality advertising inventory and the potential to meaningfully increase our average revenue per user over time, even in advance of monetizing our longer-term investments like gaming and maps. Given our massive reach among young people, we also believe we have a strong value proposition for household brands that want to reach our audience at scale but find it increasingly difficult to efficiently access our audience on linear television or other online platforms. We have seen early success with many brands and believe there is a significant opportunity to scale their success across more advertisers, especially as television and desktop budgets represent three times the total mobile ad spend in the U.S., but advertisers are increasingly unable to reach our unique demographic on those platforms. As a result, we believe that we have the opportunity to continue growing annual revenue at a pace significantly faster than our peers. Focused on driving demand from advertisers to improve CPMs in our self-serve auction.
  • Twitter: Continue our work on rebuilding the ad server, which we expect to complete in the first half of this year. And to continue our work to come out with the new version of our mobile application promotion ad format, not just to help improve an existing ad format for us—that’s important for our current advertisers—but also because this will give us a better path toward more direct-response advertising over time.
  • Spotify: Saw 200% growth in podcast hours streamed year over year, and it’s clearer than ever to us that podcast listening is driving overall health in our business. We continue to be really optimistic about programmatic audio. We’re investing in the technology side. When you think about the advertising side, in the fourth quarter alone we launched Dynamic Ad Breaks, so another product to help us monetize the ad platform better. On the podcasting side, we announced the addition of streaming audio insertion, which is a tool which we think will help us monetize podcasts going forward as well. So in general, we expect advertising to be stronger in 2020, and we expect it to ramp throughout the year. The progression should get better particularly as the podcast inventory grows. Programmatic is about 25% of ad revenue and growing. And we feel really optimistic about how big Programmatic Ad Studio as well our self-service tool, how well they’re doing and how much they could continue to grow over time.
  • Pinterest: Great ads improve the user experience on Pinterest. When ads are relevant and useful, it’s a win-win. The key here is making sure ads are relevant to our pinners’ interests. To serve ads that are relevant to the incredibly diverse range of ideas being explored on Pinterest, we need to increase the number of ads in our system, by bringing more advertisers and building tools that meet their needs. Building more robust desktop self-service tools so sophisticated advertisers can succeed with less accounts sales support, more creative tools so they can create inspiring content, in scalable measurement so they know the value they’re getting from Pinterest. It also means navigating the evolving regulatory landscape around issues like targeting and measurement, so we can continue to deliver value even as the environment changes around us.
  • Roku: Added 4.6 million incremental active accounts in the fourth quarter and ended 2019 with 36.9 million active accounts. Roku users streamed 11.7 billion hours in the quarter, an increase of 60% year over year. We predict that by 2024 roughly half of all U.S. TV households will have cut the cord or never had traditional pay TV. In 2019, all top 10 technology and telecom advertisers, as well as all top 10 consumer packaged goods companies, spent with Roku. With Dataxu technology in our repertoire, advertisers are not only able to use these capabilities when buying ads from Roku but also when buying directly from publishers. Our sponsorship offering is designed to create high impact for brands and a rewarding experience for consumers. For example, a brand can “unlock” premium programming, present a “limited commercial interruption” movie or sponsor a curated collection of content.
  • Microsoft: Search revenue increased 6%, below expectations, primarily driven by lower Bing volume. There are 675 million LinkedIn members. No mention of LinkedIn advertising revenue.
  • Apple: No real data revealed on Apple News+ and no mention of Safari. Lots of chatter about coronavirus and its impact on the business.
  • Facebook: Super-serve small businesses to drive growth: 140 million small businesses use the service, and 8 million small businesses advertise on Facebook. Launched Checkout on Instagram with a small closed beta in the first quarter of 2019 and have been building the experience, and now hundreds of businesses in the U.S. are experimenting with Checkout. Taking the time to get this right and growing fully so people and advertisers can benefit over the long term. Facebook year-over-year total reported revenue growth rate in the first quarter 2020 to decelerate by a low to mid-single-digit percentage point as compared to our fourth-quarter growth rate. Factors driving this deceleration include the maturity of the business as well as the increasing impact from global privacy regulations and other ad-targeting-related headwinds. While we have experienced some modest impact from these headwinds to date, the majority of the impact lies in front of us.
  • Amazon: Advertisers appreciate the fidelity they can provide around shopping outcomes. Amazon is uniquely positioned to do this given their retail business.
  • Alphabet/Google/YouTube: YouTube reached $15 billion in ad revenues in 2019, growing at 36% year over year, and it now has over 20 million music and premium paid subscribers and over 2 million YouTube TV paid subscribers. Speaking of shopping, people can now easily buy products in YouTube’s home feed and search results, making it possible for advertisers to reach even more audiences. YouTube advertising revenues were $4.7 billion in the fourth quarter, up 31% year over year, driven by substantial growth in direct response and ongoing healthy growth and brand advertising, which remains the largest component. In the ad-supported portion of YouTube, we pay out a majority of revenues to our creators.
  • Alphabet/Google/DoubleClick: Network advertising revenues were $6 billion, up 8% year over year, led by growth in Google Ad Manager.
  • eBay: Promoted Listings delivered $136 million of revenue, up 75%. Over 1.1 million sellers promoted more than 320 million listings in the quarter.
  • Netflix: Doesn’t want to go into advertising because of the tremendous power of Google, Facebook and Amazon.

Matthew Scott Goldstein is a versatile and hands-on, data-driven consultant with deep knowledge of the media business.
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