>[At Facebook] Q1 2019 the top 100 advertisers made up less than 20% of the company’s ad revenue; most of the $69.7 billion the company brought in last year came from its long tail of 8 million advertisers.
>This focus on the long-tail, which is only possible because of Facebook’s fully automated ad-buying system, has turned out to be a tremendous asset during the coronavirus slow-down.
>This explains why the news about large CPG companies boycotting Facebook is, from a financial perspective, simply not a big deal. Unilever’s $11.8 million in U.S. ad spend, to take one example, is replaced with the same automated efficiency that Facebook’s timeline ensures you never run out of content. Moreover, while Facebook loses some top-line revenue — in an auction-based system, less demand corresponds to lower prices — the companies that are the most likely to take advantage of those lower prices are those that would not exist without Facebook, like the direct-to-consumer companies trying to steal customers from massive conglomerates like Unilever.
>In this way Facebook has a degree of anti-fragility that even Google lacks: so much of its business comes from the long tail of Internet-native companies that are built around Facebook from first principles, that any disruption to traditional advertisers — like the coronavirus crisis or the current boycotts — actually serves to strengthen the Facebook ecosystem at the expense of the TV-centric ecosystem of which these CPG companies are a part.
Or there could be other effect...
It depends on the advertiser and the industry. For example, immediately after 9/11, and again when states started locking down, ads for local auto dealers evaporated almost overnight. But others were ready to take their place.
I wonder if it's also because these are Q2 results, and those ad campaigns would already have been budgeted and allocated. But I don't know what Facebook's Q2 months are.
Working from home and lockdowns in general.
Are you saying that 10% revenue increase has led to 10x earnings beat? That doesn't make any sense.
If you were expected to make $1.01 and spend $1, and instead you made $1.10 and spent $1, your revenue only beat by 9% but your income beat by 900%.
I know we've read about the major strikes by Amazon workers here repeatedly (supposedly all of them walking out etc). Doesn't seem to have affected the top line sales at least.
I am surprised ad industry is not affected heavily. Isn't ads the first thing a company will cut if things look bleak.