Meta and Google Lead Digital Ad Spend as Advertisers Prioritize Performance, Evercore Survey Finds

Meta Platforms (NASDAQ:META) and Google's parent company Alphabet (NASDAQ:GOOGL) are solidifying their lead in the digital advertising market, exhibiting the most positive near-term revenue trends, according to a new survey of advertising agency executives conducted by Evercore.

Advertiser Focus on Performance

The investment firm hosted calls with seven executives who manage client ad budgets ranging from $10 million to over $3 billion. A key finding was that while the digital advertising sector remains resilient, advertisers are selectively consolidating their spending into better-performing platforms rather than expanding budgets broadly.

According to the survey, Google Search continues to perform well, supported by advancements in artificial intelligence and higher query volumes. Its YouTube platform is also benefiting from an increase in premium content and the adoption of automated buying tools. Meta was noted for its improving returns on investment and performance-driven market share gains, with its new Business Agents feature showing encouraging, albeit early, potential.

A Mixed Outlook for Competitors

The survey provided a varied assessment for other players in the digital ad space, highlighting a clear separation between the leaders and the rest of the pack.

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• Incrementally Positive: Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX), and Reddit (NYSE:RDDT) received positive assessments. Amazon is seeing stabilization in Sponsored Products and strength in its demand-side platform, while Netflix benefits from strong demand for its premium ad inventory. Reddit is increasingly securing recurring budget allocations.
• Cautious Views: Pinterest (NYSE:PINS) and AppLovin (NASDAQ:APP) faced more cautious outlooks due to slowing spending growth and uneven returns for Pinterest, and inconsistent performance for AppLovin outside of its core gaming vertical.
• Negative Assessments: Snap (NYSE:SNAP) and The Trade Desk (NASDAQ:TTD) received negative feedback from the surveyed executives. Snap was cited for labor-intensive campaign management, while The Trade Desk was reportedly losing some budgets to Amazon within the limited client sample.

Key Headwinds and Tailwinds

While some platforms are gaining traction, the survey highlighted specific challenges. For Netflix, its elevated cost per thousand impressions (CPM) may weaken advertiser returns over time. Reddit's growth is still constrained by its relative audience scale.

Interestingly, the executives noted that while OpenAI's ChatGPT is attracting significant testing from advertisers, it sees limited recurring spending. This was attributed to immature advertising tools, limited ad inventory, and weak renewal rates.