For years, investors have pondered the long-term prospects of smaller digital ad firms like Snap Inc (SNAP.N) and Pinterest Inc (PINS.N), who have had to pick up the ad dollar scraps left over from larger tech rivals.
Snap and Pinterest published financial results this week that illustrated how their smaller size, diverse advertiser base, and relatively newer ad operations allowed them avoid the brunt of Apple Inc.’s (AAPL.O) decision to require applications to seek iOS users for permission to collect some data.
The market cap of Facebook owner Meta Platforms Inc (FB.O) was slashed by more than $200 billion on Thursday, a day after the company blamed Apple’s modifications for its poor fourth-quarter performance. While Meta’s announcement originally weighed down Snap and Pinterest’s stock, their shares soared 55 percent and 20 percent, respectively, late on Thursday after they demonstrated ad revenue strength.
Apple’s privacy changes, known as App Tracking Transparency, began trickling out to iOS devices in April and provided users the choice to restrict apps from tracking their activities across other apps and websites.
By the end of the fourth quarter, Snap claimed, many of its advertisers had adopted an Apple-provided tool for measuring ad success and had grown more comfortable with it. Advertisers that account for 75% of Snap’s income from advertisements that drive purchases or other consumer activities had embraced a separate product designed by Snap to track the effectiveness of their ads.
During a call with analysts on Thursday, Snap Chief Financial Officer Derek Andersen claimed that this helped the company’s ad business rebound “quicker than we anticipated” from the Apple adjustments.
Andersen said the business, which owns the photo messaging app Snapchat, started working on figuring out how to target adverts to users “in a privacy-safe way” more than a year ago, which helped Snap make progress before Apple’s data-tracking measures upended the market.
In an interview on Thursday, LightShed Partners analyst Rich Greenfield said that Snap was likely helped by the fact that the majority of its advertisers are large brands with marketing resources that allow them to quickly adapt to industry changes, whereas Meta’s advertisers are predominantly small to medium-sized businesses that were not as quick to adapt to these changes.
Twitter Inc (TWTR.N) is anticipated to highlight the trend that has boosted Snap’s results in the face of Apple’s dramatic changes when it reports next Thursday. Analysts believe the social networking site will be relatively immune to Apple because it is mostly used by advertising to target viewers during live and current events, and advertisers have relied less on Apple device IDs.
Twitter announced in April that its integration with Apple’s ad measurement platform, SKAdNetwork, resulted in a 30 percent increase in the number of Apple devices to which Twitter could target advertising.
Pinterest, a digital pinboard, announced that it would invest in video capabilities and creator-led content to increase engagement and ad income.
In an interview with Bloomberg, Pinterest’s Chief Financial Officer Todd Morgenfeld stated that the firm has not yet experienced a meaningful impact from Apple’s adjustments, but that it may in the future.
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