2016-07-25 13:27:16 | Ahead of Facebook earnings, PetMed latest to signal digital ad spend shiftAnimal pharmacy PetMed Express (PETS), commonly known as 1-800-PetMeds, revealed this morning it has completely terminated its presence in traditional TV advertising, the latest signal of the shift in advertising dollars towards Facebook (FB) and other digital platforms. PETMED DROPS TV ADVERTISING: During the company's first quarter earnings conference call earlier, PetMed revealed it has eliminated all TV advertising and reallocated funds to online and print marketing, leading a Wall Street analyst speaking on the call to opine that the company is a poster child for "the efficiency of online versus TV." AD SPEND GOES DIGITAL: PetMed's comments build on a multi-year trend in advertising spending which has seen marketing budgets increasingly tilted towards Facebook and other digital platforms. Nanigans, which offers advertising automation software primarily for direct response marketers, released a July 20 report stating that its top 20 e-commerce and gaming advertisers increased their Facebook ad budgets by an average of 200% year-over-year, with cost per click on the social network rising 21% year over year. The news was followed the next day by a Wall Street Journal report citing several digital media executives as saying Facebook and Snapchat are "going to own this world," especially in light of what they identified as YouTube's (GOOG) failure to introduce more social and sharing tools. FACEBOOK TOP BENEFICIARY OF AD TRENDS: MKM Partners analyst Rob Sanderson wrote on May 13 that the advertising shift towards digital not only continues to accelerate but continues to benefit Facebook more than any other company, and there remains "long way to go." According to MKM's ad revenue tracker, Facebook's share of allocation grew to 10% by the first quarter and should expand another 200 basis points by year end. Moreover, the social network continues to add many millions of users per year while boosting user engagement, allowing it to develop "richer and more targeted" ads that are lifting advertising pricing, the analyst said, adding that the company's Messenger app should drive a new wave of monetization growth. FACEBOOK DOWNGRADED AHEAD OF EARNINGS: More recently, BTIG analyst Rich Greenfield downgraded Facebook to Neutral on July 22, arguing that, while it remains one of the only ways to play the shift in ad spending and continues to realize "staggeringly" high ad revenue growth, investor expectations have simply risen too high. PRICE ACTION: Shares of PetMed Express have risen 4.6% to $20.50 following its earnings report this morning. Facebook, meanwhile, has gained about 8% over the past month as investors await its quarterly results, slated to be released July 27. | |
---|