As of September, digital ad revenue was expected to climb a robust 11% this year, research firm Madison and Wall reported.
Meanwhile, the firm anticipates that the ad sales of online retail platforms will jump 20% versus last year. Moreover, online ad growth should accelerate meaningfully in 2024. Madison and Wall predicts that all media will obtain about $17 billion of political ads next year when many U.S. campaigns will be in full swing.
Therefore, since much of the U.S. population spends a great deal of its time online, most of those funds likely will be spent on digital platforms. And worldwide, ad spending is expected to jump 8.2% next year, a sharp acceleration from the 4.4% gain anticipated this year.
Importantly, a well-known expression in marketing states that “ad dollars follow eyeballs.” In other words, marketers spend money on platforms in direct proportion to the number of users that they attract. Let’s explore three digital advertising stocks that are likely to benefit from their companies’ platforms.
Snap (SNAP)
Snap (NYSE:SNAP) appears to be back on the right track again. In fact, daily active users jumped 12% last quarter versus the same period a year earlier to 406 million. Moreover, the total amount of time spent on its short video app, Spotlight, soared 200% year over year (YOY).
And, the company’s chatbot, My AI, is attracting a significant number of users. Specifically, more than 200 million users “sent over 20 billion messages” on the app.
Moreover, Snap is likely to start benefiting significantly this quarter and in 2024 from new partnerships. Deals that the company recently unveiled include ones with Amazon (NASDAQ:AMZN) and Shopify (NYSE:SHOP).
Etsy (ETSY)
Etsy (NASDAQ:ETSY) specializes in allowing artists to sell their products on its platforms. The company is well-positioned to significantly benefit from the 20% in-ad revenue that online retail platforms are expected to generate this year.
The large increase shows that many more firms are recognizing the great benefit of advertisements on e-commerce platforms. Further, such platforms tend to attract a multitude of consumers who are ready, willing, and able to buy products.
Etsy reported its Q3 services revenue jumped 16% YOY to $175.4 million. This was largely due to the high increase of its ad sales.
Also encouragingly, the company’s overall EBITDA, excluding certain items, jumped 8.6% YOY to a robust $182.22 million.
Alphabet (GOOG,GOOGL)
Recently, another InvestorPlace columnist, Josh Enomoto, noted that Alphabet (NASDAQ:GOOG,NASDAQ:GOOGL) still has a commanding share of internet search. In fact, it controls over 90% of the valuable digital real estate.
Moreover, the company’s YouTube app accounted for 8.5% of total TV viewing in May, as reported by Forbes.
Clearly, Alphabet is benefiting from the acceleration of ad spending by markets. Additionally, given the strength of its online search business and YouTube, the latter trend is likely to continue.
Interestingly, the well-known multi-billionaire investor, Bill Ackman, nearly doubled his holding of GOOG stock last quarter to 4.35 million shares.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
