Yahoo Finance’s Allie Garfinkle joins the Live show to discuss advertising beats for Meta, Roku, and Alphabet following quarterly earnings.
Video Transcript
RACHELLE AKUFFO: All right, turning now to our top story. Advertising is still making and breaking big tech earnings. Earnings indicating that continued ad sales pressure with Roku and Alphabet both citing a difficult market. Meanwhile, Meta rising on its advertising performance. Joining us with more, Yahoo Finance's Alexandra Garfinkle. Good to see you, Allie.
ALLIE GARFINKLE: Good to see you, Rachelle. Digital ad slow down. I feel like it's a song we've been hearing tech companies sing for months, if not a year. And Meta really gave us the first view we've had in to what some of these numbers, what a world could look like without the digital slowdown in tech.
And it was pretty impressive, frankly. They clocked a very notable advertising beat. They also had Q2 guidance that called for a 7% growth in advertising demand next quarter. They're also building out new products, like Advantage+ is what it's called. And the goal of it is simplifying advertising for marketers while improving results, right?
So it's the sort of thing that was really surprising, especially given that we've heard a very different story from Alphabet, from Roku. Let's start with Roku, for example. They did clock a solid quarter overall. But that week Q2 guidance, they tied it back to continuing uncertainty in ads.
And you got a similar story out of Alphabet, right? In YouTube ads, we even saw this incremental pullback in advertiser spend, is what they called it in the earnings call. And the YouTube advertising revenues were actually down 3%, as was the case for network advertising revenues which were down 8%.
So you have Meta which has these beats and this optimism. And you have Alphabet and Roku which are saying, no, this is still happening. The pullback is still in place. So what is going on here?
And I actually tie it back to something that a lot of experts have been telling me, which is that we are sort of towards the end of the cycle in the digital ad slowdown. It's just a matter of how close to the end of the cycle we are. So that's where we're seeing this mismatch.
And I think that, you know, Meta has really set itself out to come out on top here. That said, let's not be too excited. I know that hearing that end of the digital ad cycle slow down sounds really exciting for investors. I wouldn't be too excited about Snap today.
I know the stock's up, what, 2 and 1/2%, almost 3% perhaps. I wouldn't be-- I wouldn't be too optimistic just yet because even though Meta has certainly come out ahead and certainly shown us something else, we still possibly have a ways to go here before the advertising market is truly at its peak again.
RACHELLE AKUFFO: And you have to wonder how much of this is a Meta specific story, as we talk about sort of tempering expectations here, versus as we're seeing some of the ad spend moving away from some of these other big tech companies.
ALLIE GARFINKLE: It's-- the truth of the matter is, Rachelle, Meta is a social media company. We think of it as Facebook. We think of it as Instagram. We think of it as WhatsApp. But in reality to me what I'll tell people at a cocktail party is that Meta is a legendary advertising business.
And part of the reason I say that it's important to keep expectations to a minimum, perhaps, for Snap is that Meta has this incredible infrastructure. And actually, it does tie back to the AI story they've been telling. They were very keen to really tie AI into advertising, the metaverse.
And I'd say-- I'd say fundamentally here, let's not forget that Meta's core has always been advertising. It is truly what Meta, arguably, has been best at for so, so long. And in the end, we will see-- we will see a pullback-- we will see no a pull-- not a pullback, a push forward of sorts moving ahead. It's just a matter sort of when. And I think for Meta, they couldn't be in a better spot right now, truth be told, Rachelle.
RACHELLE AKUFFO: And that's not something that we thought we'd be saying, you know, when they first changed their name to Meta and things were going downhill. So a very interesting turn around here for Meta. Yahoo Finance's Allie Garfinkle, thank you so much.
