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Tech giants such as Meta and Alphabet have reported a significant increase in ad revenue in their most recent quarterly reports, largely attributed to the spending of e-commerce advertisers on performance marketing. In the third quarter, Meta recorded .6 billion in ad revenue, marking a 23% increase from the previous year, while Alphabet reported .6 billion with a 9% year-over-year growth. Google’s search revenue also experienced substantial growth, reaching billion, an 11% increase.

Amazon, as a major player in the e-commerce market, saw a 12% year-over-year jump in advertising revenue, reaching billion in the most recent quarter. Meanwhile, smaller platforms like Snap returned to positive growth with a 5% increase in revenue.

According to CFO Susan Li of Meta, online commerce was the primary contributor to the year-over-year growth in ad revenue, followed by the consumer packaged goods (CPG) and gaming sectors. Similarly, Philipp Schindler, Chief Business Officer at Alphabet, stated that solid growth in the retail vertical was the driving force behind the 11% revenue increase for Google Advertising.

The success of e-commerce advertisers can be attributed to the return on investment (ROI) provided by ad platforms like Amazon, Google, and Facebook. Brad Jashinsky, a director analyst at Gartner’s marketing practice, emphasized the effectiveness of bottom-of-the-funnel advertising and performance marketing in driving conversions and sales. As a result, many brands have shifted away from top-of-the-funnel advertising and invested more in digital channels that offer measurable results.

Jeremy Goldman, Senior Director of Marketing, Retail, and Tech at Insider Intelligence, echoed this sentiment, explaining that retailers continue to invest in bottom-of-the-funnel and performance marketing due to the quick payback period and justification. On the other hand, top-of-the-funnel advertising requires a longer cycle to show significant results and ROI.

Meta’s recent revenue growth can be attributed to improvements to its ad platform, including its AI-powered Advantage+ product suite, which helps advertisers optimize ads using artificial intelligence. Additionally, Meta’s Reels feature has become a strong competitor to TikTok, attracting ad dollars.

In the case of Amazon, the company’s ad revenue growth was driven by Sponsored Product ads, with a focus on machine learning to enhance ad relevancy and measurement capabilities for advertisers. Amazon’s efforts to make its platform more user-friendly and integrated, including the introduction of an AI-powered image generation tool, have also contributed to its success.

Overall, while Amazon is likely to experience the fastest growth in the holiday quarter, Facebook and Google are also expected to see significant growth. Despite the competition, this quarter’s results demonstrate that all three tech giants can thrive and increase their ad revenue substantially.

Sources:
– Meta earnings call
– Alphabet earnings report
– Gartner’s marketing practice analysis

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