It’s Time to Read the Room
Digital Advertising Spend is Booming
One of the best skills to have as an investor is knowing how to read the room.
When common themes emerge across multiple companies within the same industry… pay attention.
This week, the room was screaming at us.
Advertising spend is booming. And social media platforms are raking it in.
Two companies just released blowout earnings reports last week: $TWTR and $SNAP.
- Twitter ($TWTR) posted its fastest revenue growth since 2014 on Thursday and shares soared. Total revenue increased +74% YoY, and total advertising revenue exceeded $1 billion, an increase of +87% YoY.
- Snapchat ($SNAP) shares rose in tandem as the company reported revenues of $982 million, +116% YoY, reflecting the momentum in its advertising business.
Alright. We’re listening.
Using Consumer Insights to Spot Outperformers
At LikeFolio, we can actually apply these emerging themes to real-time consumer data.
What do we mean?
Well, now that we know advertisers aren’t shy about shelling out dollars to effective digital platforms, we can take a look at all of the ones in our coverage universe to understand:
- Which platforms are growing the most
- Which platforms have the highest levels of Consumer Happiness
Digital platforms recording the highest growth rates and the happiest customers stand to be the most attractive vessels for brands trying to reach consumers.
And according to our data, one company is head and shoulders above its peers in BOTH metrics.
Talk about an opportunity for investors…
Pinterest is Heating Up…
Pinterest (PINS) is outperforming all social peers in LikeFolio’s universe in User Growth (Purchase Intent) and Consumer Happiness levels.
This chart has us drooling.
The x-axis displays Purchase Intent momentum versus 2019, and is indicative of user growth rates. Companies want to be on the right side of the dotted line.
The y-axis displays Consumer Happiness. Higher equals better.
And look at Pinterest’s positioning in the top-right corner.
Pinterest users report the happiest experiences, and the number of these users is growing at a higher rate versus that of Pinterest’s peers.
And if Snapchat just blew through revenue estimates while North American user growth slows (its most lucrative segment), imagine what this could mean for Pinterest… which is actually showing significant 2-year improvements.
Pinterest’s Value Proposition
Unlike other social media platforms, Pinterest is actually designed to connect users with brands and products.
Internally, we call this element “discovery,” and it’s an advertising sweet spot.
Check out consumer mentions of discovering a brand or product for purchase on Pinterest: +76% versus 2019.
You can almost feel the company firing on all cylinders as consumers in lockdown turned to the platform for inspiration in early 2020…
And by the looks of it, the momentum is still rolling.
Last quarter, Pinterest reported revenue growth of +78% YoY, driven by increased advertising spend. But this statement from the company’s CEO really nails WHY Pinterest is so attractive for advertisers:
“Businesses appreciate that Pinterest is a positive place, where people are coming to get new ideas for their life. Well-targeted ads make Pinterest more useful rather than being a distraction to what people are there to do.”
Do you get it? Instead of acting as an intrusion in consumer’s social lives, Pinterest ads are a welcomed discovery.
Keep an eye on this ahead of PINS earnings this week (July 29 after the bell)… we certainly are.
Andy Swan,
Founder, LikeFolio