Ryan Henderson's avatar
$20.4m follower assets
Could Microsoft be a real advertising giant?
In 2Q22, Satya Nadella surprised investors by stating that Microsoft's advertising arm already generates $10 billion in annual revenue (more than Snap and Pinterest combined). Most of that is driven by Linkedin, but Nadella said he thinks about it in 3 segments: Linkedin, Other Owned & Operated assets, and 3rd Party.

Owned and Operated in Microsoft's case includes all search and feed assets, which grew constant currency revenue by 21% in the most recent quarter despite a challenging advertising environment. These include properties like Bing, Microsoft Edge (the default browser on Windows), Microsoft Start (Windows' personalized news feed), the Windows app store, and more.

3rd party refers to any ad inventory monetization Microsoft does on behalf of other companies. Yahoo! is the most notable here, but this should include Netflix shortly as well. In fact, Microsoft's head of advertising seemed particularly excited about the possibilities within this segment:
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While I kind of have to read between the lines, it appears Microsoft's advertising business is still growing at a really healthy pace in spite of industry headwinds. When comparing that with other advertising businesses, even Google and Meta, Microsoft would be gaining share.

Though we might not see the independent financials for some time, if you're invested anywhere across ad-tech, it's worth keeping an eye out for management's commentary on the segment to see whether or not they're eating share.
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