Paid Social Director
Social quarterly earnings reports highlight investment focuses which can inform future digital marketing trends. We are obsessed with data and have summarised the main takeaways from the 2020 Q3 earnings reports for Snapchat, Facebook, Twitter and Pinterest explain what we believe this means for advertisers.
After Snapchat reported their latest earnings their stock increased by more than 20% in after-hours trading. This huge jump in price was down to Snap’s extremely impressive results which included a 52% year-on-year revenue jump, and a 18% year-on-year increase in daily active users which are now up to 249M.
The increase in users can partly be attributed to the tailwind that all the platforms have seen this year where people are spending more time at home on their phones due to the pandemic. However, it’s lazy to just assume the uplift is down to C-19 induced boredom as Snapchat has invested a lot in product innovation over the last year and it appears to be bearing fruit.
Snapchat partners with different publishers as well as producing their own content which has been very successful in the last quarter, especially with younger users. The earnings release stated that “More than 40% of the US Gen Z population watched sports Discover content on Snapchat last month.”
Creating lens on the platform continued to be popular with over 1.5 million lens now being created as of the end of Q3 2020 via Lens Studio. In addition to this Snapchat released 2D Body track technology that enables creators to build lens for the entire body, not just the face.
Snapchat’s increased user base means that the platform is becoming more and more relevant, especially for brands that want to reach younger users. Their increase in revenue backs this up as it proves an increased percentage of media budgets are now going to Snap, possibly at the expense of Facebook.
In addition to this Snapchat has delivered some really great innovations to the platform that could really assist brands in creating meaningful digital experiences during the pandemic and beyond. For example, Snapchat highlighted how they partnered with Jordan, Levi’s, Essie and others to create virtual ‘try on’ experiences. Solutions like this could be very useful during the pandemic and even afterwards as consumers adjust to the new normal.
All of these points add further speed to Snapchat’s increased momentum. In August, we highlighted that brands who aren’t advertising on the platform should really consider investing. Their Q3 earnings highlights only enhance this recommendation further.
Facebook shares remained relatively static in after-hours trading post the results despite sharing a 22% increase in year-on-year revenue which beat Wall Street’s anticipated results. The combined global user base of Facebook’s family of apps (including Instagram, Messenger and WhatsApp) increased by 12% year-on-year and has now reached 1.82 billion.
However, despite increased global usage, daily active users were both down in the US and Canada, two of Facebook’s most valuable advertising markets. Facebook put this down to increased numbers earlier in the year that were inflated due to the pandemic and now that lockdown restrictions have begun to ease in those markets these numbers are down.
Zuckerberg continues to focus on AR and VR with the commitment to get 10 million new Oculus headsets into consumers hands with in the next few years.
Facebook’s year-on-year growth, both in revenue and worldwide user numbers, cements Facebook’s place at the top of the social media tree. However, it’s been a well-publicised difficult year for Facebook and the user drop in the US and Canada could be the first sign that this crisis is now impacting the business. It’s unlikely that Facebook will fall off overnight, or even over a few years but it does raise the importance of brands diversifying their media investments from just Facebook and Google.
Facebook’s continued commitment to VR is encouraging for enthusiasts and start-ups committed to the technology and it’s still important for brands that aren’t involved directly in VR that the technology has huge backing. VR tech isn’t ready for mass adaptation but Facebook and Snapchat’s backing signals that it will become a key technology in the next five years. Although it’s unlikely to impact campaign planning in the next 18 months successful marketing and media planners should at least be aware of the technology to gain advantage when the VR revolution starts to bite.
Twitter continued the tech giant trend of delivering above expected earnings in Q3 with a year-on-year increase of 14% to $936 million. However, it wasn’t all good news for Wall Street as Twitter’s user numbers, at 187 million, were below analysts’ forecasts.
Earlier this year Twitter banned political advertising on the platform and in their earnings report they noted that during Q3 some advertisers had paused campaigns due to civil unrest in the US. In Q4 they expect that this trend will reverse as advertisers focus on digital channels for holiday season promotions.
Twitter highlighted they have improved their direct response and measurement products considerably for Q4 to make the platform ‘a must buy’ for advertisers. However, it’s more likely that advertisers will continue to look to Twitter for product launches as peak season approaches.
Compared to the other platforms, especially Facebook and Google, Twitter’s targeting and optimisation options are fairly limited for direct response advertising, but Twitter does have some great solutions for product launches. For example, First View and Sponsored Trends allow advertisers to reach users on a massive scale for a short period of time and are great for brand awareness for products or services with wide appeal.
Twitter’s annual revenue growth shows that more advertisers are using the platform for paid media and Twitter has made improvements to their advertising products which makes increased investment easier to justify.
However, for brands with smaller budgets it’s easier to make a case to invest that money elsewhere in Q4 as strong results are likely to be easier to achieve with Facebook or Google. Brands with bigger budgets should look to utilise some of Twitter’s flagship First View or Trends Products to get people talking about their product or service.
In Q2 Pinterest explained that users were flooding to the site to look for inspiration for the new normal and adjusting to spend more time at home. This trend continued into Q3 and was highlighted by CEO and co-founder Ben Silbermann stating that “more than ever before, people are coming to Pinterest to get inspiration for their lives—everything from planning early for a socially distant Halloween to creating great home schools for their kids”.
The statement was backed up with solid numbers. Year-on-year monthly active users were up 37% to 442 million and this followed up impressive revenue numbers which showed an increase of 58% year-on-year to $443 million.
With the adjustment to the ‘new normal’ looking likely to last for at least a few more quarters, brands and advertisers need to seriously start thinking about Pinterest in media planning sessions.
Pinterest’s offering is unique to social as advertisers can target users based on what they are searching for. With increased usage and trends developing every day on the platform there are now more opportunities than ever for brands to get involved. Initially a lot of advertisers might assume that the platform is only suitable to very photogenic or lifestyle orientated brands. At iCrossing we can confirm that this isn’t the case as we’ve seen great results on Pinterest from financial brands that might not initially be considered a natural fit for Pinterest.
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