Ad Buyer Survey Triggers Facebook, Alphabet Target Increases

Positive Implications Seen For Criteo

Analysts Thomas Champion, John Blackledge and Nick Yako said they see positive implications for Criteo, including meaningful digital dollars moving toward programmatic "targeting" as an attribute is in demand and plenty of room for customer growth.

Cowen also updated its model for the HookLogic acquisition and search product introduction. Assuming revenue contribution of $55 million (excluding traffic acquisition costs) and $7 million for search in 2017, the firm expects revenues of $940 million for the company in 2017, representing 31 percent year-over-year growth. Based on the introduction of its new quarterly estimates, Cowen raised its price target for the shares of the company.

Google Remains Dominant Franchise

While noting that search remains the single largest category of spend within digital, Cowen said respondents see Google's search offers the highest return on investment. The firm also feels Google is well positioned in video, with daily viewership in the hundreds of millions of hours and more than 1 billion in monthly average users.

Given the inclination shown by respondents toward YouTube for new brand campaigns, Cowen said the channel is well positioned for the secular shift to digital video advertising. The firm forecasts gross revenues of $7.7 billion in 2016, increasing to $25.6 billion by 2021. Based on its survey, Cowen also said DoubleClick offers Google pole position in the Programmatic transition.

Estimates For Google

Cowen expects net revenues of $85.8 billion for 2017, down from $86.4 billion previously. The firm noted that it has raised its TAC to reflect greater share of search volume on mobile.

For the fourth quarter of 2016, Cowen expects Google to report gross revenues of $25.6 billion, up 24 percent year-over-year (23 percent growth for Google own and owned sites, 2 percent for Network and 40 percent growth in other revenue). For other bets, the firm expects revenue growth of 35 percent. The firm's EBITDA and non-GAAP earnings per share estimates of $10.2 billion and $10.09 are also above the consensus estimate.

Facebook's Social Leadership

Cowen's survey revealed that about 75 percent of social spending dollars are allocated to core Facebook and Instagram. Given the respondents pre-occupation with targeting, the firm believes Facebook will benefit from its best user targeting in the market. The percentage of respondents saying they would use Facebook video for a standalone brand campaign has improved to 17 percent from 10 percent last year, Cowen noted.

Estimates For Facebook

Cowen raised its Facebook ad revenue forecast for 2017 to $36.6 billion from $35.8 billion and total revenue forecast to $37.3 billion from $36.5 billion, with the company's core Facebook strength, higher video contribution and Instagram keeping the firm above consensus.

Ratings/Price Targets

• Alphabet: Outperform/price target raised to $1,050 from $1,000.
• Criteo: Outperform/price target raised to $55 from $53.
• Facebook: Outperform/price target raised to $156 from $150.