Russia RT Restricted: UK Culture Minister Ask Meta, Tik Tok To Restrict Access To RT
March 3, 2022
April 29, 2022
As the heart of tech earnings season wraps up, one persistent theme has been weakness in the digital ad market.
The war in Ukraine, rising inflation, Apple’s privacy changes and an overall pullback in ad spending help explain why Facebook, Google, Amazon and Twitter all reported disappointing revenue numbers this week, and by Snap last week.
The app for short viral videos has soared in popularity, becoming the world’s third-largest social network last year, behind Meta’s Facebook and Instagram, according to Insider Intelligence.
Advertisers are following the eyeballs.
“Across the industry, short-form video continues to take a greater proportion of time spent,” Atlantic Equities analysts wrote in a note Thursday. “Primarily driving and benefiting from this trend has been TikTok, with some concern that this was creating a competitive challenge for Meta.”
TikTok is owned by China’s ByteDance, which is privately held and reportedly valued at $140 billion. Insider Intelligence estimates TikTok will have 755 million monthly users globally this year, and says its market share in social networking will top 20% this year, nearing 25% by 2024.
“In the last several years, mobile networks have gotten faster and now video is the main way that people experience content online,” said Facebook CFO Dave Wehner on the earnings call. “Short-form video is the latest iteration of this, and it’s growing very quickly.”
In Alphabet’s annual report, the company recognized ByteDance as a competitor in social networks, alongside Meta, Snap and Twitter, and as a rival in digital video services, where the likes of Amazon, Apple, Disney and Netflix also have offerings.
Alphabet’s first-quarter results this week trailed estimates, largely due to a big miss at YouTube, which was suppose to grow 25% but only expanded by 14%. Executives said consumers are spending more time on YouTube Shorts, which grew to 30 billion views in the quarter, up fourfold from a year ago.
TikTok competition concerns’
YouTube is testing ad formats on Shorts, but in the meantime, analysts are cutting their growth projections. Stifle lowered its growth rate estimate for YouTube in the second quarter to 10% from 13%, and Cowen Equity Research slashed its projection to 7.5% from 19.7%.
“We think revenue results were largely fine, but not enough to soothe investors’ rising ad recession anxiety, nor growing TikTok competition concerns after YouTube missed again, and by a larger margin than prior,” wrote BMO Capital Markets analysts in a Wednesday note. They recommend buying the stock.
Last week, Snap reported disappointing results, with CEO Evan Spiegel telling investors that the quarter “proved more challenging than we had expected.” And on Thursday, Twitter came up short on first-quarter revenue. The company didn’t offer any commentary as it’s in the process of being acquired by Elon Musk.
Then there’s Amazon.
Unlike the big social media platforms, Amazon isn’t so clearly tied to TikTok. Advertisers tend to be brands that are promoting their products on Amazon’s dominant e-commerce site and apps.
However, even Amazon’s fast-growing ad business fell well short of analysts’ estimates, growing 23% from a year earlier to $7.88 billion. Wall Street expected $8.17 billion, according to StreetAccount.
“We’re hearing there’s emerging concern that TikTok is a competitor to YouTube’s mobile position,” Michael Nathanson, an analyst at MoffettNathanson, told Alphabet executives on the company’s call.
“Bears will likely point to weakness at YouTube coincident with rising concern over engagement shift and the monetization ramp at TikTok,” Loop Capital analysts said in a note.
Loop’s Alan Gould brought it up with Facebook executives.
“You were quite open about the competitive issues on TikTok, which seems to be impacting the whole industry now,” Gould said on the call. “Any way of quantifying how much you think TikTok is impacting Facebook?”
Wehner touted Facebook’s homegrown product.
“I think it’s clear that short-form video is a massive opportunity for the industry broadly, and we’re very pleased about the offering that we have with Reels and the opportunity for us to compete for share and time in the market,” Wehner
March 3, 2022
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