Essential Second-Quarter Stats for Ad Tech and Platforms

The ups and downs of various industry leaders

How agencies and media companies performed in Q2 2019. Illustration: Trent Joaquin; Source: 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 second quarter.

Subheading with swirling green and blue lines that reads: Ad Tech
  • The Trade Desk: Revenue of $160 million, up 42% year-over-year. In 2019, according to IDC, global advertising spend will be about $725 billion, up over 4% from 2018. At current growth rates, global advertising will be a trillion-dollar industry in about seven years, one of only a handful of industries with a TAM over that mark. Programmatic is still a relatively small part of total global advertising. It is estimated at around $34 billion in 2019, but it is growing five times faster than total advertising at around 20% year-over-year according to Magna Global. Growth rate is 10 times the pace of overall advertising growth, and, in fact, growth is nearly four times the growth rate of digital. The digitization of advertising, particularly TV, is massive. The shift to data-driven decisioning versus guessing or intuition is game changing. These changes in the landscape significantly benefit TTD. The Trade Desk signed 55 new MSAs, representing some of the largest brands on the planet. This is the highest number of new MSAs signed in one quarter since the end of 2016. Through the first half of the year, 60% of the Fortune 500 companies are now running advertising through The Trade Desk, and 47% percent of spend on the platform was in mobile; that’s a new record. Mobile video spend growth was about 50%. Mobile in-app spend growth was 63%. Data spend again was up 80%, and cross-device spend was up over 250% for the third quarter in a row. Audio, probably the best value in programmatic today, grew almost three times in the second quarter, for the second quarter in a row. Connected TV spend growth was also amazing, growing nearly three times from a year ago. Likely never see a channel larger and more full of opportunity than we have right now in CTV. Much of what TTD has done over the last decade has simply been a dress rehearsal for the digital shift happening in TV right now. Driving towards $1 trillion total advertising market by 2027, and about half of that market will be in some form of video; most of that will be in premium TVs. We’re at the very beginning of the digitization of TV advertising. More and more consumers watch TV content through connected devices. Amazon Publisher Services is working with The Trade Desk. This is a breakthrough deal in connected TV. Amazon’s third-party content providers—think Discovery, NBC and ESPN apps on your Amazon Fire. This is quality inventory on premium content. Hershey has consolidated much of its programmatic advertising on TTD. They have gone from several DSPs down to just one, which gives them simpler line-of-sight into the effectiveness of their programmatic campaigns. Developed, and then gave away TTD Unified ID solution. Major initiative on the supply side has been the partnership with White Ops to scrub all ad inventory for fraud. Now scrub all inventory before it ever comes to the buy side. They reduced their rates and TTD significantly increased volume by insisting all TTD suppliers work with them. Focus is on advertisers and agencies, with commitment to the open internet and everything that means in terms of transparency.
  • Criteo: Revenue of $528 million, up 1% year-over-year. Retargeting business saw a low single-digit decline. Added 360 new clients, reached highest level since the second quarter of 2018. New products leverage the user graph of 2 billion Criteo IDs. The user graph links highly granular shopping data with robust, persistent IDs across multiple devices and user environments. Retail clients are looking for a turnkey platform that combines both performance and branding. The market is demanding full transparency, both in terms of pricing and inventory. Retailers still don’t invest in their own apps to fully capture the growing smartphone usage. There are 3,800 publishers using Criteo Direct Bidder on web inventory. Now directly connected to 200 app publishers, about 50% more than in the first quarter. Working hard to implement self-service capabilities. Self-registration feature for new clients is now live. Self-registration is a must-have to further scale the addition of new small and medium clients. Completely new executive team, with the exception of the CFO. For Google Chrome, there is no material impact that Google has done in the previous few weeks, no impact on the business. Started with the exchanges now making progress buying directly from the mobile app publishers. Seeing a slight decrease in average CPM over the period, which is consistent with prior periods. Taking a more consultative approach in the sales process and hiring app specialists. Still very early in the upper funnel, awareness and consideration product at Criteo. Privacy is a major trend in the market and a very good one—Criteo is supportive of having an open internet which is privacy friendly, because ultimately if you want to do targeted advertising you need to do it in a transparent way; otherwise the users lose trust. Internet works best seeing ads you’d rather see, versus ads that are just visual pollution. Pay for the inventory no matter what and get paid only when the users engage with the ad.
  • Rubicon: Reported $38 million in revenue, up 32% year-over-year. Mobile revenue grew 42% and desktop revenue grew 21%. Increase came from stabilization in CPM trends, greater than expected strength in audio and video and favorable year-over-year take rate comps. Supply path optimization, or SPO, also continues to pick up momentum in the industry. Video inventory remains in extremely high demand. Prebid’s video capabilities continue to expand, which will increasingly provide access to more inventory and drive additional video growth. Demand Manager is built on Prebid as opposed to publishers running Prebid alone. Most publishers prefer to share media revenue for Demand Manager, also open to SAS fee for Demand Manager. CPMs fluctuate as buyers and sellers adjust algorithms, a big cat-and-mouse game. Rubicon will not see positive or negative impact from Google’s unified auction. Previously said take rate around mid-13%. Not one of the big holding companies is looking to give Google more money. Traditional digital video is still very complex—desktop video, web, mobile app video and mobile web video. With CTV/internet TV, the new flavor of video has a whole new set of complications like Pods, creative separation etc.
  • Telaria: Revenue of $18.2 million, up 47% year-over-year. CTV was once again the biggest driver of revenue growth. Continuing to expand platform relationships with leading premium publishers. CTV revenue increased 133% year-over-year to $7.1 million and composed 39% of revenue. This is up from 24% of total revenue just a year ago, helping increase platform CPM to $15.41 compared to $11.60 in the prior year period. Working with OTT services such as Disney’s Hulu with 58 million ad-supported dealers, Viacom’s Pluto TV with 16 million active users and independents like Tubi TV which recently announced 20 million active users. Notable new partners signed in the U.S. included, Fox News, ABC News and Sinclair’s NewsON, which includes 170 local TV stations covering 83% of the U.S. population. SpotX and FreeWheel are the companies run into the most.
Subheading with swirling blue and green lines that reads: Platforms/Aggregators
  • Netflix: U.S. paid membership was essentially flat in the second quarter; Netflix expects it to return to more typical growth in the third quarter and is seeing that in these early weeks of the third quarter. Like HBO, Netflix is ad free and that remains a deep part of the brand proposition. When you read speculation that Netflix is moving into selling advertising, be confident that this is false. Netflix believes it will have a more valuable business in the long term by staying out of advertising and instead entirely focusing on competing for viewer satisfaction. Over the next 12 months, Disney, Apple, WarnerMedia, NBCU and others are joining Hulu, Amazon, BBC, Hotstar, YouTube, Netflix and many others in offering streaming entertainment. The competition for winning consumers’ relaxation time is fierce for all companies and great for consumers. The innovation of streaming services is also drawing consumers to shift more and more from linear television to streaming entertainment.
  • Facebook: Total ad revenue for the second quarter was $16.6 billion. Ad revenue grew 28% year-over-year. More than 2.7 billion people use Facebook, Instagram, WhatsApp or Messenger each month, and more than 2.1 billion people use at least one of the services each day. Investing a significant amount of engineering resources in building tools to review products in the ways they use data, set a new standard for the industry and ship new products will take longer. Mobile ad revenue was $15.6 billion, contributing approximately 94% of total ad revenue. Gave small businesses free tools that previously only the largest companies could access. Improved how quickly refreshed the ads are that people see. In the past, these ads were preselected at the beginning of a feed session. Now, the ads are refreshed while people are scrolling through their feeds. On shopping, building new ways for people to shop directly on the apps. Continuing closed beta with 23 partners on Instagram and launched a new feature this quarter that enables creators to tag products in their posts. In the second quarter, the average price per ad decreased 4% and the number of ad impressions served across the services increased 33%. Similar to last quarter, impression growth was primarily driven by ads on Instagram Stories, Instagram Feed and Facebook News Feed. It is a challenge training the market that you can’t just take your TV ads and put them on Facebook, because they don’t perform the same way. The best TV ad is 30 seconds; it builds slowly to a story and the product reveal is usually at the very end. The best mobile-first ad or ad on Facebook gets to the main point or gets to the product in the first three seconds and captures your attention much more quickly. Seeing faster growth in impressions coming from Stories. Helped businesses make the shift to mobile and now helping them shift to Stories, video and eventually messaging. Not enough to make these new formats available, also need to make it easy for advertisers to create effective ads. Doing this by launching new ad products and improving our existing ones to deliver more value for people and advertisers. The year-over0year decline in average price per ad reflects an ongoing mix shift towards Stories ads.
  • Amazon: Net sales increased 20% to $63.4 billion. Other revenue of $3 billion, up 37% year-over-year, primarily includes sales of advertising services. Prime Day was once again the largest shopping event in Amazon history, with more than 1 million deals exclusively for Prime members, and more than $2 billion in products were bought from small and medium-sized businesses. Over the two days of Prime Day, on July 15 and 16, sales surpassed the previous Black Friday and Cyber Monday combined. Free one-day delivery is now available to Prime members on more than 10 million items, and just getting started. Prime Video received 47 Emmy nominations. Excited to have acquired the Sizmek ad server and the Sizmek dynamic creative optimization, or DCO. Customers are going to be able to continue to use those proven products and services. Invested in the long-term success of Sizmek. Amazon advertising and Sizmek have many mutual customers. Amazon knows how valued these prudent solutions are to the customer base. Adding more and more advertising for rollin out devices and Prime Video—new Prime Video content in particular internationally. Video advertising is one focus area for expanding video and over-the-top offerings for brands. Taken some steps with live sports and then IMDb TV, but continue to do things like add more OTT video supply, etc.
  • Google: Revenue of $38.9 billion, up 19% year-over-year. Results were driven by ongoing strength in mobile search in particular, as well as YouTube and Cloud. Big contributor was costs associated with content acquisition, primarily for YouTube and mostly for advertising-supported content. Google Sites revenue was $27.3 billion, up 18% year-over-year. Network revenues were $5.3 billion, up 9% year-over-year, continuing to reflect the performance of the primary drivers of growth within network, namely Google Ad Manager followed by AdMob. Broader vision to build the more helpful Google for everyone and organize the world’s information and make it universally accessible and useful—evolving from a company that helps people find answers to a company that helps you get things done. Redesigned mobile search page and brought popular full-coverage feature to search to better organize news results. YouTube channels with more than 1 million subscribers grew by 75% year-over-year. Announced a unified shopping experience and universal shopping cart, all of which help to make Google more shoppable. Applying machine learning to both the user and advertiser experiences helped drive revenue growth. YouTube revenue growth was strong in the first quarter and again strong in the second quarter. For YouTube, brand advertising is still the largest part of the business. It’s growing at a strong pace, continuing to see substantial growth in direct response.
  • Microsoft: Has $125 billion in revenue for the full year with double-digit top-line and bottom-line growth. Commercial Cloud business is the largest in the world, surpassing $38 billion in revenue. LinkedIn has 645 million members. Microsoft Teams now has more than 13 million daily active users and 19 million weekly active users. Investing to empower the world’s 2 billion gamers to play the games they want, with anyone, anywhere, on any device, with the new game-streaming service, Project xCloud, which will enter public trials this fall. Xbox Live monthly active users increased to a record 65 million.
  • Verizon: Verizon Media Group revenue is $1.8 billion, down 3% year-over-year, an improvement from the 7% year-over-year decline reported in the first quarter. Gains in native and mobile advertising continue to be offset by declines in desktop advertising, though the business continues to build on positive momentum in key areas. Continuing to migrate customers to recently integrated advertising platforms, simplifying interactions with partners and driving synergies within the business. Remain focused on growing audience, engagement and monetization across super channels which includes sports, finance, news, entertainment, home and mail. During the quarter, Verizon launched Yahoo! Finance Premium and HuffPost Plus, which are subscription services that enhance the experience of two of the most popular media assets. Want to partner with content players instead of investing in their own.
  • Twitter: Revenue grew 18% year-over-year, driven by strength in U.S. revenue. Total advertising revenue was $727 million, up 21% year-over-year. Ongoing product improvements continued to drive growth in average monetizable daily active users, which reached 139 million in the second quarter, up 14% year-over-year. Made a number of product improvements in the second quarter, including better relevance in home timelines and notifications. Video ad formats continued to show strength, notably from Video Website Card, In-Stream Video Ads and First View ads. Data licensing and other revenue totaled $114 million. U.S. advertising revenue totaled $379 million, an increase of 29%. Large to mid-tier customers continue to represent a sizable majority of the advertising revenue, while the self-serve channel continues to deliver growth off a smaller base. Total ad engagements increased 20%, resulting from increased usage and improved click-through rates across most ad formats. Focused on delivering better relevance, making it easier for advertisers to declare objectives, initiate campaigns and measure success. Continue to add people to the team that works with advertising partners. Made decisions in the second quarter to deprecate certain legacy ad formats to better serve customers and drive greater focus in revenue product. Those decisions likely have a negative near-term revenue impact. Much work on the ad server to make sure that it is positioned to move quickly to try new things, to attract great people to the company who want to work on the latest technology. Deliver better relevance, to help advertisers reach their objectives better, move faster and deliver stronger ROI for advertisers. Want to help advertisers launch new products and services, connect with what’s happening and move further down the funnel with ad formats. Think there’s a lot more opportunity for Twitter to help them deliver. Data licensing (including MoPub) and other revenue totaled $114 million, an increase of just 4% year-over-year. Highest priority is to improve the health of the public conversation on Twitter, and an important part of that is ensuring rules and how they are enforced.
  • Snapchat: Reported $388 million in revenue, up 48% year-over-year. Daily active users now at 203 million. More than 75% of the 13-to-34-year-old population in the United States is active on Snapchat. Worked with partners to release seven new premium games. Investing in premium content, seeing the quality of the platform improve. Augmented reality has become a daily behavior for the vast majority of the community. Number of active advertisers continues to grow. There were more ad accounts active on Snap this quarter than ever before, but remain constrained by demand, not by supply. Focused on two fundamental priorities in the ad business. The first is to develop powerful ad formats that are both innovative and easy to create, and the second is to show consistent, predictable results for advertisers, driving measurable ROI and enabling them to optimize for the outcomes most relevant to them. Announced Snap Select for premium video ads. Snap Select combines things brand love: 6-second, full-screen, non-skippable video product running adjacent to a set of premium shows. Can bought by a simple one-click buy flow, at a predictable fixed price. Driving ROI is the best advertiser-retention tool. Started testing new Instant Create onboarding flow, which generates ads for businesses in three simple steps from their existing assets. Believe that augmented reality is the future of experiential, immersive advertising. Sales team now fully vertical focused.
  • AT&T: Merger synergies remain on track. Record year with 191 prime time Emmy nominations for WarnerMedia, and HBO alone scored 137 nominations. Turner had $3.4 billion in revenue, up 1.9% year-over-year because of a 3.9% increase in subscription revenues and 33% growth in content and other revenues, partially offset by a 4.4% decline in advertising revenues. Benefited from higher domestic affiliate rates and growth at Turner’s international networks; revenues were affected by unfavorable foreign exchange rates. Advertising decreased because of the shift of the NCAA Men’s Final Four Championship game and lower audience delivery at Turner’s domestic entertainment networks. HBO with $1.7 billion in revenue, up 2.9% year-over-year reflecting a 44.9% increase in content and other revenues, partially offset by a decline of 0.9% in subscription revenues. Subscription revenues declined year-over-year because of lower domestic linear subscribers, partially offset by higher digital and international growth. Warner Brothers with $3.4 billion in revenue, up 2.5% year-over-year because of 13.4% growth in theatrical product revenues and 27.8% growth in games and other revenue, which offset a 14.3% decline in television product revenues. Theatrical product increased primarily because of higher home entertainment revenues. Television product decreased primarily because of lower licensing revenues. Games and others increased primarily because of the release of Mortal Kombat 11. XANDR with $485 million, up 23.7% year-over-year; without AppNexus, revenues were up 4.1% year-over-year.
  • Pinterest: Second-quarter revenue of $261 million, up 62% year-over-year, as more advertisers recognize the power of the platform to reach consumers. Total U.S. revenue was $238 million, an increase of 55% year-over-year. Monthly active users hit 300 million during the quarter. Made progress on a number of fronts, including the internationalization of the ad business, simplifying the ad systems for small and medium businesses and improving advertisers’ ability to measure the effectiveness of their ad spend. Performance was driven by a combination of international and U.S. growth. Continue to grow revenue from both new and existing advertisers, and accelerated growth of active advertisers to the highest rate in over two years. Product innovation also drove year-over-year revenue growth, in particular the adoption of optimized conversion objectives and new video ad formats. More share of wallet with incumbent large advertisers. New and emerging verticals: talked previously about auto and entertainment as some new verticals. Working to implement Pinterest first-party tag. Announced a number of integrations with platforms that make implementing the tag just as simple as pushing a button. Announced integration to Google Tag Manager, PixelYourSite, TOEM, WooCommerce and Square all in this quarter, and look to expand that coverage overall.
  • Spotify: Revenue was €1,667 million in the second quarter, 31% year-over-year. For ad-supported business, strength in the US. Audio was the fastest growing product for the third consecutive quarter, up 38% year-over-year. Programmatic and ad studio revenue growth accelerated to 71% in the second quarter and now account for approximately 30% of total ad-supported revenue. Programmatic growth in the U.S. exceeded 50%, and the next five largest markets in aggregate increased triple digits year-over-year. Seeing increased demand for podcast advertising following the recent acquisitions and continued development of owned and exclusive non-music audio content. While still small, continue to expect fast revenue growth from podcasts through the remainder of 2019 and into 2020. Over time, ambition is to reinvent the podcasting ad experience by building a new tech stack to enable targeting, measurement and reporting capabilities like Spotify has for the core ad-supported offering. Users who are listening to podcasts are also listening to more music. Users listened to more than 17 billion hours of content on the platform, up 35% year-over-year. Total monthly active users grew 29% year-over-year to 232 million. Finished the quarter with 108 million premium subscribers globally, up 31% year-over-year.
  • Apple: Reported $53.8 billion, up 1% year-over-year. Blowout quarter for wearables, accelerating growth of well over 50% and a new high-water mark for services, set an all time revenue record of $11.5 billion. Now have over 420 million paid subscriptions across the services on the platforms, with a goal of surpassing the 500 million mark during 2020. Apple Pay is now completing nearly 1 billion transactions per month, more than twice the volume of a year ago. Double-digit growth in the App Store search ad business. Benefiting from a broader secular move to over-the-top services. Enormous amount to look forward to over the next few months, including the launch of new services like Apple Arcade, Apple TV+ and Apple Card.
  • Roku: Revenues rose 59% to $250.1 million. Active accounts exceeded 30 million. Reached one in five U.S. households, and domestic scale rivals the biggest MVPD. The Roku OS was built to create value for advertisers and content distributors. Ad business is thriving as the superior solution providing precision targeting, access to premium inventory, unique sponsorships and OTT reach that an individual publisher or third-party ad-tech provider cannot match. Robust growth in advertising continued as Roku’s monetized video ad impressions once again more than doubled year-over-year, and Roku expects that trend to continue throughout 2019. Proving to advertisers and content providers that Roku delivers incremental substantial reach over traditional linear TV and is more effective at building ad products. Continue to command premium CPMs—it’s a function of having a great product that prudently performs better than the alternatives. There are over 40 DSPs that are connected into the Roku ecosystem. Diligently working on ad buffering, completion rates and also new formats, new sponsorship/brand-integration opportunities. Most of dollars flowing into OTT advertising today are coming out of TV budgets. Third-party entities and intermediaries who don’t have that direct consumer relationship are going to be more challenged to articulate and justify the uses of data.

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