Evercore: Short-term outlook for Meta and Alphabet's advertising revenue is positive

According to a survey conducted by Evercore among advertising industry representatives, the digital advertising market continues to show stability, though advertisers are not broadly increasing budgets and are instead directing spending toward platforms that deliver better results.

Evercore's survey included seven advertising agency executives who work with clients on both performance marketing and brand advertising. The advertising budgets they manage range from $10 million to over $3 billion.

According to the survey results, the most positive expectations for near-term advertising revenue were recorded for Meta and Alphabet. Assessments for Amazon, Netflix, and Reddit were also positive, though with relatively less optimism.

At the same time, agencies are taking a more cautious stance toward AppLovin and Pinterest, while assessments for Snap and The Trade Desk were negative.

Google's search service continues to deliver strong results. According to Evercore's assessment, growth in AI usage and the increasing volume of search queries are supporting advertising spend. For YouTube, premium content and automated ad-buying tools remain attractive factors for advertisers.

Meta stands out in particular for improving ad effectiveness and gaining market share in performance marketing. The company's Business Agents feature is also showing early signs of growth potential, though it is still too early to assess its impact.

In the AI space, ChatGPT is generating significant interest among advertisers, though its use currently remains mostly at the testing stage. According to Evercore's survey, repeat spending is limited by the tools' lack of maturity, limited ad inventory volume, and low renewal rates.

Amazon's advertising business is showing signs of stabilization. Notable developments include the stabilization of Sponsored Products' growth rate, strengthening of the demand-side platform and video advertising segments, and broader use of the platform by companies that do not sell products directly on Amazon.

For Reddit, the platform is increasingly receiving repeat advertising budgets, supported by better targeting and improved support for advertisers. However, the platform's audience scale remains one of its limitations.

On Netflix, demand for premium ad space is strong, and the platform is improving its ad targeting capabilities. However, high CPM — cost per thousand impressions — may somewhat reduce campaign returns for advertisers.

Regarding Pinterest, Evercore's survey revealed a slowdown in advertising spend growth and uneven performance results. Despite product improvements, the platform's limited category scale remains a challenge.