Wedbush Gives Feedback From Digital And Social Agencies On Facebook And Twitter

Wedbush analysts Shyam Patil and Andy Chang recently “hosted meetings with eight leading digital and social agencies in the US and Europe.

Most of the focus was on Facebook Inc. FB, followed by Twitter Inc. TWTR” according to a report issued Thursday.

Facebook Highlights

The analysts reported positive feedback on Facebook and that “spend on Facebook continues to increase y/y and q/q. One specific agency, who is heavily levered to mobile and direct response, noted that its Facebook spend was up by more than 25 percent q/q. The outlook for 4Q and 2015 also appears healthy.”

“The agencies generally noted a healthy appetite from advertisers for video ads, though commented that it is still relatively early. The agencies commented that video eCPMs are typically 2-5x NF eCPMs (desktop and mobile) and depend on volume and time frame. The agencies also mentioned that while YouTube pricing may be cheaper, they believe Facebook offers superior segmentation and targeting.”

Instagram, while holding enormous potential, was seen as challenging as “it appears that Facebook and brands are still trying to figure out how to monetize the platform. The agencies specifically noted that brands are wary of potential user backlash from advertising on the platform, as seen through past ads.”

Wedbush Rated Facebook Outperform with an $80 Price Target.

Twitter Highlights

According to the report, “feedback seems to suggest that spend on Twitter continues to grow nicely y/y and q/q. There appears to be healthy demand for the company’s app install ad unit. That said, there do appear to be some issues with advertisers who want to target based on age, as Twitter does not always have age data for its users.”

“There was some debate among the speakers about Twitter’s ad pricing relative to value. Some agencies believe that pricing outside of North America and the UK may need to come down, while others feel it is justified by the ROI.”

See Deutsche Bank's recent thoughts on Twitter's potential to double revenue.

Wedbush Rated Twitter Neutral with a $50 Price Target.

Facebook Inc. recently traded at $76.27, down 1.61 percent.

Twitter Inc. recently traded at 55.21, down 0.38 percent.