Merkle Takes A Look At Ad Spend Across Internet Names

An investor call with leading performance marketing agency Merkle indicated strong search growth, robust ad growth at Facebook Inc FB, a lack of long-term ad commitments at Twitter Inc TWTR and huge ad commitments at Snap Inc SNAP, Aegis Capital’s Victor Anthony said in a report.

Aegis Capital has a Buy rating and price target of $1,011 on Alphabet Inc GOOG GOOGL. The ratings on Facebook, Twitter and Snap are Buy, Sell and Hold, respectively.

Search Spend

Merkle reported that search spend on Google accelerated by 2 points to 21 percent year-over-year in the first quarter of 2017, from 19 percent in Q4 2016. Growth in Q1 was 23 percent on a two-year stacked basis, versus 20 percent in the prior quarter.

Search on Google remains healthy, and data released by both Merkle and IgnitionOne suggest “a continuation of these positive trends this year,” Anthony mentioned. He added, “The Search strength should give comfort to investors” who have been concerned about the brand advertiser backlash at YouTube leading to significant estimate reductions.

Separately, Google announced that advertisers worldwide had measured more than 4 billion store visits in AdWords, representing 400-percent growth from the 1 billion measured as of May 24, 2016.

Ad Spend On Social Media

Merkle indicated that Facebook may report another robust quarter, similar to Q4 2016. “Instagram continues to be their fastest growing ad platform, but off a low base,” the analyst wrote.

Advertisers continue to experiment with ads on Twitter, but there is “no consistent commitment” or any continued ad spend, like there is on Facebook.

Referring to Snap, Anthony commented that “a ‘small’ number of clients are making ‘big’ investments in Snap in hopes of seeing if there are benefits to being a first mover on the app.” It was still yearly to tell whether advertisers would see any longer-term potential.

Snap could meet or beat revenue estimates in Q1. “However, in the few short days since launch, we are starting to see FB users use Stories and that could pose a problem for Snap in much the same way Instagram did when its own version of Stories launched,” the analyst commented.

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