If you are wondering how to invest in digital advertising stocks, then companies like Alphabet, Facebook are worth looking at. The two of them put together make up 50% of the online advertising market share. They have been among the top performers this year. Alphabet is up 10.81% year-to-date while Facebook is up 24.56% year-to-date. For comparison, the S&P500 has returned 3.55% since January 2nd, 2020.
Alphabet reported its Q22020 earnings in late July. The company reported quarterly revenues of $38.3 billion out of which $29.9 billion came from advertising. YouTube ad revenue increased 6% Y-o-Y to $3.8 billion, up from $3.6 billion during Q22019. During the pandemic, digital advertising got bulk of the ad spend while traditional channels like print media and broadcast did not enjoy strong performances. However, during any downturn, ad spending tends to drop disproportionately.
Other advertising stocks to buy include Facebook, Twitter, Snap, and Amazon. You might be surprised to see Amazon’s name among the best advertising stocks. However, Amazon has quietly gone on to establish a formidable advertising platform. Recently, the company reported advertising revenues of $4.2 billion during Q22020. This is a jump of 41% when compared on a Y-o-Y basis.
Consumers often go to Amazon for their first product search. Customers searching on Amazon are more likely to be “ready to buy” than other searchers. As a result, ad spending on Amazon has gone up. At the same time, Amazon has also introduced targeting and measurement tools that are preferred by advertisers to manage their campaigns.
Meanwhile, Alphabet has also strengthened its advertising capabilities. During a recent call with analysts, CEO Sundar Pichai said, “(Alphabet) gave search advertisers the ability to add high-quality images to their ads, helping shoppers quickly see products to consider and take action faster. We added features to make video ads more easily shoppable and browsable on YouTube, as more businesses are shifting to online to offset physical store closures.”