Groups of internet companies have seen an increase in user attention – and the revenue that comes with it – during the pandemic shutdowns that have kept people at home and glued to their devices. But only the largest of them are poised to reap the long-term benefits from changing consumer habits.
In this week’s earnings reports, Amazon.com Inc. And Facebook Inc. And Google detailed the ways in which people have become more dependent on their offerings since lockdowns and quarantines have changed the way people shop, work, learn, and interact – saying these trends could drive growth for a long time – term.
Meanwhile, smaller social networks disappointed Twitter Inc. And Pinterest Inc. Investors’ hopes, as the former expected below-estimated revenues, while the latter warned that user growth is dwindling in the United States. EBay said sales gains during the outbreak will diminish as consumers receive vaccinations and run out of stimulus checks. The variation highlighted how dominant players are already leveraging their power and size to boost their outreach everywhere.
Amazon has added grocery delivery customers, sold more Alexa amplifiers, and signed more companies into its cloud computing service – a trend it expects to continue “as we move into the post-pandemic recovery,” CFO Brian Olsavsky said of an investor calling. Google lobbied its case that Chromebooks are the best tools for virtual school and that YouTube can rival TV as personal entertainment – making it all the more worthy of an advertiser’s investment.
Google and Facebook both talked about how the pandemic has accelerated small businesses’ shifts to the web, using their platforms for e-commerce ads and sales. Sherrill Sandberg, Facebook’s chief operating officer, said such companies “are asking us what we can do to help them not just now, but in the long term.”
Under the microscope
Even before the COVID-19 outbreak gave internet giants new ways to cement their place in consumers’ daily lives, companies were under scrutiny for potential anti-competitive behavior. All three have faced antitrust investigations in Congress amid concerns that they are building empires at the expense of healthy competition and consumer choice. Their findings during the pandemic may open new questions about their potential monopolies – as retail and personal entertainment options close, consumers with fewer options to spend time and money have turned their attention to the ubiquitous ubiquitous ergonomic tech giants.
Where consumers have gone, follow product marketers. The effects of the pandemic have been most dramatic in digital advertising, particularly e-commerce campaigns. Sandberg said Facebook ad results in the first quarter were supported by consumers buying more goods online. The social media company’s average ad price jumped 30%, indicating that health demand allowed it to charge more per spot.
Amazon “other” revenue, which includes advertising, rose 77% to $ 6.9 billion, “another indication that boosting Amazon’s business last year is showing no sign of abating,” says Nicole Perrin of the EMarketer researcher.
Google spent the last quarter of the year introducing more ads from retail and travel companies eager to reach consumers who are starting to spend again. Ruth Porat, chief financial officer of Google’s Alphabet Inc, said the continuation of this trend will depend on the pace of the global coronavirus recovery, but some analysts are more optimistic about the internet giant’s potential to benefit from the big reopening at a later date. Quarters.
Search, Maps and YouTube
Philip Schindler, Google’s chief business officer, said the company’s “ideal place” is a mixture of online and offline purchases facilitated by products such as Search, Maps and YouTube. Google has helped major retailers like Dick’s Sporting Goods Inc. And Michaels Cos Arts and Crafts Series. Fulfill orders with clients looking for options of sidewalk meeting or trying to locate products available near them.
“The trends are likely to continue as the broader economic recovery continues throughout 2021 and digital adoption trends become more and more permanent,” JMP Securities analyst Ron Josie wrote in a recent note. “We were so impressed by the results of the primary ads on the search network that Google highlighted the power across most ad categories, with the primary focus on retail and travel seeing renewed interest among users.”
The advertising and e-commerce revenue streams of the internet giants have been immune to some of the problems that faced other tech leaders during the pandemic. Apple Inc. , Which was also cited in the Congressional antitrust investigation, makes most of its money from hardware, which means it is more vulnerable to supply chain risks. Company executives said this week that they would see the $ 3 billion to $ 4 billion negative impact of the June quarter from the chip shortage that plagued the iPads and Macs, two product lines that have gained popularity during the pandemic.
Apple, in turn, is focusing more on non-device revenue, including from the App Store, Apple Music, games, cloud storage, tech support, advertising, and video. This service division now generates more than $ 50 billion in sales annually.
At a fraction of the size of Facebook, the rival social network Twitter has lost the full benefit of its ad spending richness in part because the company sells more promotions aimed at helping companies improve their brand recognition, unlike ads that directly lead people to purchase products. With consumers at home on their phones, online shopping has become a hobby, as spending has shifted from travel and events to groceries, home improvement and more comfortable wardrobes.
Pinterest and EBay
Meanwhile, both Pinterest and EBay have seen an increase in activity during the shutdowns, but they caution that these gains are unlikely to last. “Starting in mid-March, the easing of pandemic restrictions slowed the growth of MAU in the United States and reduced participation year after year, as people spend less time online,” Pinterest said in a statement. When government stimulus runs out, EBay expects spending to decline as well.
Facebook also expects people to no longer rely on its apps for entertainment and communication as they get vaccinated and return to personal activity with friends and family. But this shift is unlikely to be on a scale to worry investors.
“I don’t think anything is very exciting,” Chief Financial Officer Dave Winner said on Thursday.