U.S. major digital advertising platforms have reported juggernaut earnings in FQ2'21. GOOG, FB, AMZN, SNAP, and ROKU saw their advertising revenue jumped 69%, 56%, 88%, 116%, and 117% from a year ago. Interestingly, the management teams all acknowledged substantial "price inflation" in the digital advertising market. 

The strong demand from brands across all sectors drives this digital ad inflation while the economy reopens. OTAs, such as Booking and Expedia, have doubled their advertising spending QoQ as the travel market bouncing back. Consumer brands like Coca-Cola and Pepsi invest aggressively in new digital ad campaigns to gain higher market shares. Nike allocates a much bigger budget to digital ads since its eCommerce business has flourished since the pandemic.

Advertising Revenue YoY Growth (%)

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Advertising Revenue YoY Growth (%)

Brands' Marketing Expense ($, Million)

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Brands' Marketing Expense ($, Million)

However, digital ad platforms and brands have given a different outlook on the advertising market. Facebook has warned investors about a dramatic growth deceleration. On the other hand, brands plan to increase their advertising spendings for the rest of 2021. Booking even believes the current ROI "attractive." 

The pandemic has transformed America's best brands, many of which now own much larger Direct-to-Consumer (DTC) businesses with better cost structures. In addition, they keep investing heavily in new digital advertising tools such as dynamic ads to capture more incremental consumer wallets. Many brands expect their operating margin to expand despite increased ad spending because their topline growth is accelerating.

• We are doubling our spend on consumer-facing activities and for the rest of the year with an eye to both delivering the year, but also being well-prepared for 2022, we have a very robust investment agenda." – John Murphy, Coca Cola CFO

• "We expect to invest in capturing demand and increasing awareness during the peak travel season and ahead of the continued global recovery of travel demand." - David Goulden, Booking CFO