Morgan Stanley On Facebook, Google And Twitter Advertising
Morgan Stanley analysts led by Benjamin Swinburne released a research report Wednesday on Internet media.
Based on the trends, it is clear that the major internet media players are locked in an advertising platform war.
The report noted that Facebook Inc (NYSE: FB) "again is limiting a brand’s organic reach on the platform, although separately [it] is moving to reduce the friction of buying on FB with changes to its Campaign Structure.
"With increased control over the content quality and supply, we believe efforts like this will create a more premium user and advertising experience. In our view, Facebook’s ~$0.75 blended global CPM suggests it has meaningful pricing upside," according to Swinburne.
The analyst report noted that Facebook "is launching Places Directory and gearing up a larger video push incorporating premium video and more video ads. These products leverage both mobility and the evolution of the smartphone as a quality advertising platform."
The report concluded that "Location-based search is inherently mobile and mobile video is expected to grow 42 percent CAGR from ’14 – ’18. Our Overweight thesis is grounded in our bullish outlook for mobile display advertising as smartphone penetration increases globally."
"Total time spent on Facebook mobile in the US (app + mobile browser) continues to outgrow US Internet mobile minutes, with FB mobile up +59 percent y/y vs overall US mobile +51 percent."
“New products highlight [Google Inc’s (NASDAQ: GOOG)] efforts to address a maturing desktop search business, monetize growing mobile usage, and expand into ancillary revenues to drive top line growth," according to the report.
"On the mobile search front, Google is adding in-app voice search on Android. In its attempt to go after more brand advertisers, Google continues to invest behind YouTube. This includes the YouTube’s Music Key launch. This product builds on YouTube’s more prominent placement of music content on YouTube by adding an ad-free subscription service.”
"Overall search queries in the US (desktop only) were down 3 percent y/y, compared to -4 percent on Sept and +10 percent this time last year. Queries +5% M/M, roughly in-line with last year’s trend. Google [lost] 30bps of query share YTD to 67 percent and Microsoft up 130 bps to 19.5 percent.”
The analysts saw a suite of new products at the Twitter Inc (NYSE: TWTR) Analyst Day “aimed to drive engagement and stickiness on the consumer side and higher ROI for brands on the advertiser side."
“Incremental news from Twitter has been focused on building out the platform for SMBs. While these ad products are nicely driving monetization, the level to which Twitter can drive consumer engagement from these product changes is unclear in context of big growth expectations.”
“Twitter total time spent in the US grew faster than the industry, +34 percent y/y in Oct vs 23 percent overall.”
The firm rated Facebook Overweight, with Google and Twitter at Equal-Weight. All three firms traded lower on Wednesday.
Latest Ratings for FB
|Oct 2016||Credit Suisse||Maintains||Outperform|
|Sep 2016||JP Morgan||Maintains||Overweight|
|Sep 2016||Loop Capital||Initiates Coverage on||Buy|
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