Quarterly Earnings Q4 2016

Norm Johnston, Chief Strategy and Digital Officer

Background
The first major earnings reports of the year are out, covering the major players and their Q4 results.

Apple: Desperately seeking diversification

Apple needed a big quarter after several previous earnings reports left analysts disappointed. It delivered in Q4. Quarterly revenues were $78.4bn, up from $77.4bn a year ago, helped by strong sales of the iPhone 7. Remember the term “phablet”? The new iPhone7 Plus, with its much larger screen, appears to have given people the nudge they needed to finally upgrade. Interestingly iPad sales were down by 19%. Apple had strong growth across the board with sales increasing with everything from desktops to the Apple Watch. Apple Pay users tripled and transaction volumes rose by 500%. Investors are also keeping a close eye on Apple’s Services (Music, Apps, etc.) given Cook’s very public prioritization of that side of the business, particularly with a growing challenge from Amazon. All eyes are now on Apple’s highly anticipated next wave of product and services, particularly the next iPhone, which will fall on the products 10^th anniversary.

Alphabet: It’s all about the CPC

Alphabet’s quarterly fortunes seem to increasingly rest on one key variable: how much it makes per click (cost-per-click, or CPC). So despite an increase in revenue from both YouTube and its core search product, Alphabet’s stock price took a tumble primarily based on that one single variable. CPC decreased by 16% year-over-year, surpassing analyst expectations of an 11% drop. It has been the great migration to mobile that has been the underlying cause of the decline. Frustratingly for Google the last quarter results indicated that the volume in mobile searches and the corresponding revenue was making up for the CPC drop. Now it appears, at least in the short term, Google is still exposed to fluctuations in that volume/value equation as well as nuances between brand and generic search CPC and trends. That explains the flurry of new ad monetization products, particularly for YouTube, where there is still plenty of room for growth through better ID-based targeting using historical behavioral data, such as your search activities. Alphabet’s “Other Bets” showed growth ($262m in Q4 vs $150m a year ago), but from a small base in contrast to the overall business ($26bn). 

Facebook: Teflon

Facebook delivered another strong quarter despite industry-wide criticism on some embarrassing miscalculations on key metrics such as video view durations. The lingering impact of that flawed data may yet come back to bite Facebook even as it races to correct historical data and introduce greater third-party verification. In the meantime it’s mainly positive news. Revenue was up by 53% to $8.8bn, spurred on by more monthly users (+17% yoy) and more monetization and advertising opportunities, particularly on Instagram. So far there has been little sign of last quarters’ expectation setting over future growth in light of potential ad loading issues. On the negative side Facebook took a financial hit on the Oculus lawsuit to the tune of $500m. On the one-to-watch side is Zuckerberg’s comment that Facebook may be exploring original and licensed short-form content (with ads), perhaps to challenge the about-to-be-very-enrichened-via-IPO SNAP.

SNAP: Here we go again

SNAP officially and finally filed for its long-mooted IPO. SNAP is now reporting 158m daily users (as opposed to the usual monthly metric), healthy but slow growth compared to rivals like Facebook that experienced a much stronger “hockey stick” addition of users in the early days. This comparatively anemic growth has raised concerns that perhaps Snapchat has peaked, or is losing momentum to Facebook which has layered comparable and competitive features into apps like Instagram. A platform built on youth is always at risk when they grow up and move on, and the next generation decides there is something cooler out there. Nevertheless, SNAP has done much to build a strong advertising and content platform with plenty of opportunities for brands to play. Revenue reached $400m in 2016, a healthy start to monetization, even if the company still lost $500m due to investments and costs. It’s doubtful any of this will make a difference to the IPO, which seems certain to whip the markets into another Facebook-like frenzy of buying. Whether SNAP faces a similar marketing beating and correction to its share price in the early days is probably somewhat dependent on whether analysts view it as the next Facebook or Twitter. 

Quarterly Earnings Q4 2016

Norm Johnston, Chief Strategy and Digital Officer

Antecedentes                                                                                                                                                            

Los primeros informes de ganancias importantes del año están listos, cubriendo a los principales jugadores y sus resultados del cuarto trimestre

Apple: Desesperadamente buscando Diversificación

Apple necesitaba un gran trimestre después de que varios informes de ganancias anteriores dejaron a los analistas decepcionados. Sucedió en Q4. Los ingresos trimestrales fueron de $ 78.4 billones, por encima de $ 77.4 billones hace un año, ayudado por las fuertes ventas del iPhone 7. ¿Recuerda el término "phablet"? El nuevo iPhone7 Plus, con su pantalla mucho más grande, parece haber dado a la gente el empujón que necesitaba para actuar finalmente. Curiosamente, las ventas de iPad disminuyeron un 19%. Apple tuvo un fuerte crecimiento en de ventas, desde los PC hasta el Apple Watch. Los usuarios de Apple Pay triplicaron y los volúmenes de transacciones subieron un 500%. Los inversores también están observando de cerca los servicios de Apple (música, aplicaciones, etc.) dada la prioridad muy pública de Cook de ese lado del negocio, particularmente con un desafío creciente de Amazon. Todos los ojos están ahora en la esperada próxima ola de productos y servicios de Apple, particularmente el próximo iPhone, que caerá en el décimo aniversario de los productos.

Alphabet: Es todo sobre el CPC

Las fortunas trimestrales de Google parecen descansar cada vez más en una variable clave: cuánto gana por cada  clic (CPC). Así, a pesar del aumento de los ingresos tanto de YouTube como de su principal producto de búsqueda, el precio de las acciones de Alphabet tuvo una caída basada principalmente en esa única variable. El CPC disminuyó un 16% año con año, superando las expectativas de los analistas de una caída del 11%. Ha sido la gran migración al móvil que ha sido la causa subyacente de la disminución. Frustrantemente para Google los resultados del último trimestre indicaron que el volumen en las búsquedas móviles y los ingresos correspondientes compensaba la caída del CPC. Ahora parece que, al menos a corto plazo, Google aún está expuesto a las fluctuaciones en esa ecuación volumen / valor, así como los matices entre la marca y CPC de búsqueda genérica y las tendencias. Esto explica la gran cantidad de nuevos productos de monetización de anuncios, en particular para YouTube, donde todavía hay mucho espacio para crecer a través de una mejor segmentación basada en ID utilizando datos históricos de comportamiento, como las actividades de búsqueda. "Otras apuestas" de Alphabet mostró un crecimiento (262 millones de dólares en el cuarto trimestre frente a los 150 millones de dólares del año anterior), pero desde una pequeña base en contraste con el negocio general (26 billones de dólares).

Facebook: Teflon

Facebook dio otro fuerte trimestre a pesar de las críticas de toda la industria sobre algunos errores de cálculo embarazosos sobre las métricas clave, como la duración de la vista de video. El impacto persistente de que los datos defectuosos todavía puede volver a aparecer, incluso mientras corre para corregir los datos históricos e introducir una mayor verificación de terceros. Mientras tanto, hay principalmente noticias positivas. Los ingresos aumentaron un 53% a 8.800 millones de dólares, impulsados ​​por más usuarios mensuales (+ 17% interanual) y más oportunidades de monetización y publicidad, especialmente en Instagram. Hasta ahora ha habido poca señal de la expectativa de los últimos trimestres sobre el crecimiento futuro a la luz de posibles problemas de carga de anuncios. En el lado negativo Facebook tomó un golpe financiero en la demanda de Oculus a la melodía de $ 500m.  Facebook puede estar explorando el contenido propio, corto y original (con anuncios), quizás para desafiar el -enriquecerse-vía-IPO SNAP.

SNAP: Aquí vamos de nuevo

SNAP oficialmente y finalmente se presentó para su oferta pública inicial de largo plazo. SNAP ahora está reportando 158 millones de usuarios diarios (en comparación con la métrica mensual habitual), un crecimiento saludable pero lento en comparación con rivales como Facebook. Este crecimiento comparativamente anémico ha planteado preocupaciones de que quizás Snapchat ha alcanzado su punto máximo, o está perdiendo impulso por Facebook que ha acodado características comparables y competitivas en aplicaciones como Instagram. Una plataforma construida sobre la juventud está siempre en riesgo cuando crecen y se mueven, y la siguiente generación decide que hay algo más fresco por ahí. Sin embargo, SNAP ha hecho mucho para construir una fuerte plataforma de publicidad y contenido con un montón de oportunidades para que las marcas jueguen. Los ingresos alcanzaron $ 400 millones en 2016, un comienzo saludable para la monetización, incluso si la compañía todavía perdió $ 500 millones debido a inversiones y costos. Es dudoso que nada de esto hará una diferencia en la salida a bolsa, que parece seguro para azotar a los mercados en otro frenesí de compra similar a la de Facebook . Si SNAP se enfrenta a un golpe de marketing similar y la corrección de su precio de las acciones en los primeros días es probablemente algo dependiente de si los analistas lo ven como el próximo Facebook o Twitter.

Search Targeting on Pinterest

Amy Perkins

Background:

Pinterest announced last week that it will be introducing a search advertising product. Although keyword based targeting has been available through third party providers such as 4C since 2016, the new product will include new targeting features and a shopping feed similar to Google’s product listing ads.

Details and Implications:

Pinterest prides itself on being the ‘world’s catalogue of ideas’, with over 150 million people a month using the social media platform to plan everything from tomorrow’s lunch to next year’s round the world adventure. The key to this statement is ‘to plan’, as users tend to be at the top of the funnel browsing for ideas that they plan to purchase later - sometimes up to three months before a key event or holiday. According to a Pinterest study, 76% of Pinners save items to purchase later, taking advantage of this unique way to preserve ideas that resonate. With 2bn searches a month taking place on Pinterest and the majority being generic non-branded terms (97%), this is a great opportunity for advertisers to capture this intent whilst the consumer is still in the research phase.

Generic keywords are notoriously expensive on other search engines such as Google and Bing, therefore Pinterest could be the new favourite search platform for generating awareness, especially as 72% of Pinners say that the platform has introduced them to a new brand or service. Keyword targeting is not new on Pinterest, advertisers have previously been able to target using keywords through third party platforms such as 4C. The update is regarding new targeting capabilities, bringing the options in line with search engines ability to use match types. At present, all keywords are broadly matched, resulting in less accuracy. The update means advertisers will now be able to ensure that keywords match exactly the search query of the user (exact match), or at least the specific keyword will be included (phrase match). Keywords will be purchased through an auction, with CPC determined by bid and relevance of the creative.

To help Pinterest get ahead in the search space, it has also partnered with Kenshoo, which has been a leader in integrating paid search and social campaigns, to enable advertisers to share their shopping feeds to create ads. This means that instead of having to develop ad creative (or ‘Pins’ in this case), the shopping campaign ads are pulled directly from the advertiser’s feed, with the possibility to dynamically update ads based on inventory levels. Considering the majority of ecommerce retailers will already have a shopping feed in place for use on other search engines, this will give advertisers another route to would be consumers.

Summary:

Pinterest offering more advanced keyword targeting options and new ad creative formats will help make it a better offering for advertisers looking for a platform to gain awareness with greater potential reward. Pinterest is a unique platform in terms of how consumers interact with brands, as unlike other social media platforms, they are actually researching and actively searching for new ideas and potential purchases. This offers a real opportunity to create engaging and relevant awareness campaigns, as long as marketers can be patient and wait for the conversions to occur a few months down the line. 

Rank semana 04

Facebook Measurement Update

Andy Roberts

Background:

In the face of recent criticism over inaccurate data reporting, Facebook has announced a series of initiatives designed to provide deeper understanding of the performance of its products and increased levels of third party measurement.

Details and Implications:

For its first initiative Facebook has expanded its partnership with Nielsen to enable its Digital Ad Ratings (DAR) product to measure reach and in-target performance on desktop and mobile across 8 new markets, bringing the total to 25 global markets. New markets are: New Zealand, Hong Kong, South Africa, Puerto Rico, Turkey, Taiwan, Poland and Ireland. It has also extended its partnership with comScore going beyond viewability to include in-target performance for Facebook properties in the United States. This will start with tests using comScore to evaluate in-target reach for audiences on desktop and mobile through its validated Campaign Essentials (vCE) product.

The initiative is welcomed as it provides demographic support of traditional Facebook data targeting across more markets and products. This enhancement also brings Facebook closer to what we regard as a standard facility across most other digital vendors. We continue to push all publishers and platforms, including Facebook, to introduce third party audience verification across all markets as soon as possible.

The second initiative sees the extension of third party viewability measurement beyond Facebook and Instagram video to more placements, apps and services including Audience Network in-stream video via comScore and Integral Ad Science (IAS). The issues surrounding display viewability are now being addressed on Facebook through comScore, Integral Ad Science and Moat. These partners will be able to provide metrics on when a display ad enters the Facebook screen and when the entire ad appears on the screen. Facebook is also adding a new viewability verification partner, DoubleVerify.

For some time GroupM have been pressurising Facebook to firstly allow and then to extend the use of third party verification to bring it in line with the majority of the market. So it is good to see progress although the speed of integration and the interpretation of output data has been slow.   We welcome the inclusion of more verification partners to provide more robust comparisons. However, we are keen to see measurement extended across more markets and to see faster acceptance of output data to allow us to make better informed investment decisions.

The final initiatives involve two ways of improving the sharing of insights. The first of these involves the expansion of the Metrics FYI blog to cover all aspects of measurement. It will be renamed Measurement FYI. The second sees the introduction of a portal where measurement partners can gather data directly from Facebook, Instagram and Audience Network to provide better quality inputs for market mix modelling (MMM). The MMM portal is designed to provide more accurate and actionable insights for advertisers that engage in cross-channel measurement and planning.

Finally advertisers and agencies are being allowed through the garden walls to have exportable access to Facebook data that was previously restricted solely to its domain.   Whilst we are still to learn the full extent of data access and whether this is available to all clients, it is certainly a positive step in the right direction and will allow access and use of source data. However, given recent measurement issues, we will continue to have worries about the true accuracy of FB sourced data unless it is third-party verified.   

Facebook Measurement Update

Andy Roberts


Antecendentes

Frente a las críticas recientes sobre los informes de datos inexactos, Facebook ha anunciado una serie de iniciativas diseñadas para proporcionar una comprensión más profunda del desempeño de sus productos y mayores niveles de medición de terceros.

Detalles e Implicancias

Para su primera iniciativa, Facebook ha ampliado su asociación con Nielsen para permitir que su producto Digital Ad Ratings (DAR) mida el alcance y el rendimiento objetivo en desktop y móviles en 8 nuevos mercados, lo que eleva el total a 25 mercados globales.  Los nuevos mercados son: Nueva Zelanda, Hong Kong, Sudáfrica, Puerto Rico, Turquía, Taiwán, Polonia e Irlanda. También ha extendido su asociación con ComScore más allá de la visibilidad para incluir en el rendimiento in-target para las propiedades de Facebook en los Estados Unidos. Esto comenzará con las pruebas que usan comScore para evaluar el alcance in-target para audiencias en desktop y móviles a través de su producto validado Campaign Essentials (vCE).

La iniciativa es bienvenida ya que proporciona apoyo demográfico de los datos tradicionales de Facebook en más mercados y productos. Esta mejora también acerca a Facebook a lo que consideramos como una parametrización estándar en la mayoría de los otros proveedores digitales. Continuamos impulsando a todos los editores y plataformas, incluido Facebook, a que introduzcan la verificación de audiencia de terceros en todos los mercados tan pronto como sea posible.

La segunda iniciativa contempla la ampliación de la medición de la visibilidad de terceros más allá del video de Facebook e Instagram a más ubicaciones, aplicaciones y servicios, incluido el video in-stream de la red de Audience a través de comScore y de AdSense Integral. Los problemas relacionados con la visibilidad de la pantalla ahora se están abordando en Facebook a través de comScore, Integral Ad Science y Moat. Estos socios podrán proporcionar métricas sobre cuando un anuncio de display ingresa a la pantalla de Facebook y cuando todo el anuncio aparece en la pantalla. Facebook también está agregando un nuevo partner de verificación de visibilidad, DoubleVerify.

GroupM han impulsado a  Facebook a permitir y luego ampliar el uso de la verificación de terceros para que la mayoría del mercado. Por lo tanto, es bueno ver el progreso, aunque la velocidad de integración y la interpretación de los datos de salida ha sido lenta. Acogemos con beneplácito la inclusión de más socios de verificación para ofrecer comparaciones más sólidas. Sin embargo, estamos deseosos de ver la medición extendida a través de más mercados y ver una aceptación más rápida de los datos de salida para permitirnos tomar decisiones de inversión mejor informadas.

Las iniciativas finales implican dos maneras de mejorar el intercambio de ideas. La primera de ellas es la expansión del blog de Metrics FYI para cubrir todos los aspectos de la medición. Se le cambiará el nombre a Medición FYI. En segundo lugar, la introducción de un portal en el que los socios de medición pueden recopilar datos directamente de Facebook, Instagram y Audience Network para proporcionar una mejor calidad de los insumos para el mercado de mezcla de modelos (MMM). El portal MMM está diseñado para ofrecer información más exacta y útil para los anunciantes que participan en la medición y la planificación entre canales.

Finalmente los anunciantes y agencias están pudiendo acceder a datos de Facebook que anteriormente estaban restringidos únicamente a su dominio. Si bien todavía debemos conocer el alcance total del acceso a los datos y si está disponible para todos los clientes, es sin duda un paso positivo en la dirección correcta y permitirá el acceso y el uso de los datos de origen. Sin embargo, dados los problemas de medición recientes, seguiremos teniendo preocupaciones acerca de la verdadera exactitud de los datos de FB, a menos que sea verificada por terceros.

Snapchat & mDAR Measurement (ENG)

Susan Hogan


Background:

Last week, Snapchat announced that advertising partners will now be able to buy in-app ad space by audiences - including age group and gender - using a partnership with Nielsen’s Mobile Digital Ad Ratings (mDAR). The move is intended to better position the channel against both digital and traditional TV competitors.

Details and Implications:

Nielsen has been conducting measurement of ads appearing on Snapchat for the past year, however this new offering now adds a buying option via an API. The Snapchat in-app audience can now be targeted on mobile in ways comparable to TV (i.e., gross ratings points; a next-day view etc).

Snapchat is quickly evolving from its picture messaging and private messaging beginnings to become a public content provider with sophisticated delivery. It now boasts content alliances with live events, brand networks and publications (MTV, CNN, Daily Mail, iHeartRadio and ESPN). In 2016 it introduced an algorithm that ranks and pushes content based upon engagement which is also tailored to its users’ interests. In addition, more recently, Snapchat enhanced its ad targeting capabilities by expanding its partnership with Oracle Data Cloud.

While perhaps still not top-of-mind as a content provider. These partnerships and more tailored, consumer-centric changes indicate that Snap Inc. is looking to sway consumers to the smaller screen for a much larger share of audience in the entertainment space. This of course also supports its intention to go public this year with an initial public offering (IPO).

Summary:

It would seem that ahead of that IPO Snap Inc. is listening to both consumers and the industry. While its advertising and video performance remains to be analyzed and compared against other digital and TV players, the in-app buying option with mDAR measurement is a firm step forward towards becoming a more valued second screen player. However, Snapchat is still competing with the likes of Twitter, Facebook and YouTube for those coveted TV dollars.