Big tech gets bigger
Analysis
Over the past several weeks, a slew of earnings results have revealed the global ad industry is in rude health — if you’re a tech giant.
Revenue grew in the double-figures for the likes of big tech companies Alphabet, Meta, and Amazon, as well as smaller social media competitors Snap, Pinterest and Reddit.
Blowout earnings from big tech shouldn’t be a surprise to UK marketers, but they come as other media channels are struggling amid macroeconomic headwinds.
According to the latest AA/Warc adspend figures, digital ad channels, including search, online display, retail media and social media, now account for more than four-fifths (81%) of UK adspend.
Tech platforms appear to be benefitting not only from growing spend from local businesses, but also enlarged social media and online display budgets from many larger brands.
Their go-to-market strategy has become compelling in part due to increased automation. Using mass data collection and machine learning, platforms claim to be able predict with accuracy the effectiveness of campaigns, and brands seem apathetic to the fact that measurements of marketing effectiveness are not typically able to be independently verified by third-parties.
Here’s a roundup of big tech’s Q3 earnings, and what to look out for as these companies move forward with their respective business strategies.
Alphabet
Google parent Alphabet reported a 16% year-on-year increase in revenue to $102.3bn, with search, YouTube ads, Google subscriptions, platforms, devices and Google Cloud each delivering double-digit growth in Q3.
Alphabet’s strong quarterly growth is notable given the company is now being significantly challenged in search for the first time in decades, with competitor large-language models like OpenAI’s ChatGPT putting at risk Google’s position as the front door of the web.
Google has responded in turn by debuting its own AI search features, namely AI Overviews and AI Mode. While commercial opportunities are scant, it is possible advertisers could soon be given direct inventory to buy against within AI search results — and not just above or below them.
CEO Sundar Pichai noted that search’s growth was “boosted by the engagement we’re seeing with features like AI Overviews”, which the tech giant claims now has 1.5bn users a month.
Those engagement gains have come at the cost of publishers on the open web, who have warned Google, which they allege illegaly stole their IP to train its AI models, risks putting them out of business by no longer sending sufficient referral traffic.
In the UK, the Competition and Markets Authority (CMA) confirmed in October that the company, including its AI search features, has met the legal requirements to be designated with “strategic market status”, meaning the regulator could consider targeted interventions to create more fair competition in the market. This comes after a US judge declined to break up Google’s business interests, despite finding them monopolisitic.
YouTube also grew revenues 10% in Q3 to $8.9bn. The streaming company is increasingly positioning itself as an alternative to more traditional TV companies, though controversial Barb statistics have suggested its UK audience, at least on TV sets, is over indexed with toddlers.
‘An historic failure’ or a new opportunity? Industry reacts to Google’s search monopoly remedies
Meta
Meta reported 26% year-on-year growth in revenue to £51.2bn in Q3, though total costs also grew 32% to $30.7bn amid a strong push into AI-related investment and 8% growth in headcount.
CEO Mark Zuckerberg has bet on developing VR headsets and AR glasses, while working to improve AI tools for advertisers in the long tail.
“If we deliver even a fraction of the opportunity ahead, then the next few years will be the most exciting period in our history,” he declared in the company’s Q3 earnings.
However, it’s worth noting Meta’s ad model appears to sit atop a foundation of fraudulence and crime. According to a report from Reuters, the company projected that 10% of its 2024 revenue — equivalent to $16.5bn — would come from ads for scams and banned goods.
Internally, Meta reportedly estimates that its platforms show users a staggering 15bn scam ads every day.
Should Meta be forced to tamp down on ads for illicit goods or scams by global regulators, or if legitimate advertisers decide to disinvest from the platform — as suggested by competitor media owners at this month’s Future of Media London event — its ads business could be severely undercut.
Amazon
Amazon reported its ad revenue jumped 24% year on year to $17.7bn. Leadership indicated that all its major ad offerings (DSP, on-site, Prime Video) grew “in a meaningful way”.
Prime Video, meanwhile, announced in October it had grown its average monthly ad-supported reach 15% year on year, now connecting with 22m active viewers in the UK.
For Amazon, the retail giant’s dominance in online shopping has given it a distinct advantage with advertisers. Brands, increasingly seeking data-led approaches to marketing, are able to link shopper data with adspend on not just Prime Video and Amazon’s own online store and app, but also Twitch, Spotify, Netflix, Disney+ and Roku through Amazon DSP.
The high-margin ads business is thus quickly becoming one of the crown jewels in Amazon’s business model, and one without any strong direct rival, as few companies have scale in both entertainment and shopping across consumer verticals like Amazon does.
Snap
Snap grew revenue 10% year on year to $1.5m in Q3. Daily active users increased 8% to 477m.
Shares of the company jumped 16% after it announced a partnership with Perplexity to integrate that firm’s AI-powered answer engine directly into Snapchat. Perplexity will pay Snap $400m over one year, beginning in 2026, as part of the deal. Year-to-date, however, shares of Snap remain down 27%.
The company has had a volatile handful of years as its ads business has often underperformed investor expectation. Despite strong user figures, ad revenue has been inconsistent due to its perception as a platform more for brand than performance advertising. Snap has thus spent the past year focused on simplifying its ad offering to attract more SMEs and rolling out new inventory aimed at helping local businesses.
Looking ahead, Snap is also betting several billions worth of research and development expenditure that smart glasses represent the future of consumer technology. A next-gen version of its glasses will debut next year, but the commercial opportunities for brands are still relatively nascent.
Pinterest reported $1.05bn in revenue in Q3, a 17% year-on-year increase. The platform also reached an all-time high of 600m global monthly active users, an increase of 12% year on year.
CEO Bill Ready said the earnings are a result of the company’s investments in AI and product innovation “paying off”, with the platform becoming “a leader in visual search”.
Pinterest is seeking to situate itself as a true competitor in the future of AI search. Users have always used the platform to develop aesthetic interests and consider purchasing options, but the social giant has leant more into the consumer opportunity in discussions with brands, and has improved performance tools to allow smaller businesses an easier time advertising on the platform.
Equally, Pinterest has regularly highlighted its claimed status as a more “positive” platform, lacking in much of the toxicity commonly associated with other social media companies.
According to Ready, adapting consumer behaviour, alongside timely investment, has “effectively turned our platform into an AI-powered shopping assistant for 600m consumers. In turn, global advertisers are increasingly counting on Pinterest as a go-to search platform to reach their customers and drive sales”.
‘Positive’ platforms improve purchase intent, Pinterest says
Reddit grew total revenue 68% year on year to $585m in Q3, with ad revenue making up the bulk ($549m) of earnings. Adjusted Ebitda, the company’s meausre of profit, improved to $236m from $142m the prior year. Daily active unique users jumped 19% to 116m.
While still dwarfed by other challenger social companies like Snap and Pinterest, Reddit’s continued strong growth has been notable this year. Agencies have increasingly begun using the platform as a core social listening tool, and given Reddit’s common use by major large-language models, it has emerged as a key platform for the nascent generative engine optimisation (GEO) subfield.
“Territories like X have obviously become quite clouded by political debate and also just people moaning about late trains and cancelled flights. Happily, as well as some of the traditional social listening methods, we’ve now got Reddit,” Michael Brown, IPG Mediabrands’ UK and EMEA head of insights, told The Media Leader on a recent episode of The Media Leader Podcast.
“[Reddit] has been serving us as a fantastic lens onto emerging interests, topics, trends, pain points. We’ve been working really closely with Reddit over the past few months to embed using Reddit Insights in the way that we service clients.”
The platform is also looking to compete more directly in search through Reddit Answers, its own AI search product, launched in December 2024 of last year.
Reddit CEO Steve Huffman: ‘People hate ads, but they love brands’