Facebook, Google and Amazon are reaping the benefits from advertising's pandemic hot streak


The logos of Google, Facebook, Instagram, Twitter, Snapchat and TikTok displayed on a computer screen.Denis Charlet | AFP via Getty Images

Digital advertising’s hot streak appeared to have lasted into the first quarter as travel starts to return and e-commerce spend persists, analysts say. 

Snap will be the first of the major ad-supported internet companies to report earnings on Thursday, while Alphabet‘s Google, Facebook, Pinterest, Twitter and Amazon will follow next week. These players have seen outsized benefit as certain stay-at-home trends have been accompanied by massive shifts into digital ad spend. 

Bernstein analysts wrote that if the fourth quarter of 2020 was digital advertising’s “perfect storm,” then the first quarter of 2021, and perhaps the rest of the year, will be “hurricane season.” 

“Undercurrents supporting a strong digital ad year include an accelerating upgrade cycle from image to video, TV ad ripe for picking, and brand spend returning,” they wrote. “Investor expectations for the 1Q prints are high across the board, though not without a little noise in the run-up to earnings.”

Some digital ad players had been expecting impact of Apple’s privacy change, which goes into effect next week, to have impact in the first quarter. Bernstein analysts noted that the “IDFA boogeyman mostly missed 1Q, but an imminent rollout of Apple’s policy could well hamper 2Q guidance commentary and management Q&A.” 

The quarter also offered a time when some consumers were starting to spend on travel or return-to-work clothes, while others were still in lockdowns and were still looking for “distraction and delivery.” 

Industry analysts have said they’ve seen evidence of strong digital ad growth in the first quarter, in part due to heightened e-commerce spend that was helped by the latest stimulus checks. Meanwhile, search is expected to steadily come back throughout the year as travel brands expand budgets

But digital ad-supported tech companies’ earnings later this year will also show how likely certain trends that helped them soar during the pandemic, like e-commerce, will bear out in the future.

Evercore analysts pointed out that June will be the first tough comp quarter for e-commerce names and the ability of these “Covid winners” to maintain