SOCIAL MEDIA UPDATE Q2 2020 Ad Boycott, ’s IGTV Ads, ’s Partner Summit, ’s Declining Ad Revenues and More

JULY 2020 Jasmine Enberg Contributors: Debra Aho Williamson UPDATE Q2 2020: FACEBOOK AD BOYCOTT, INSTAGRAM’S IGTV ADS, SNAPCHAT’S DEVELOPER CONFERENCE, TWITTER’S DECLINING AD REVENUES AND MORE

This is the latest installment in an ongoing series of updates for the major social platforms. The goal of each report is to provide a summary of key recent developments and what they mean for marketers.

How is ad spending doing? Net Facebook Ad Revenues Worldwide, 2018-2022 billions, % change and % of total digital ad spending Our new forecast shows that Facebook, Instagram $108.56 and Snapchat will grow their worldwide ad revenues in 2020, albeit at a much weaker rate than we previously $90.67 expected. Twitter’s ad revenues will decline. Q1 earnings $73.78 from the platforms showed mixed results, from $69.66 year-over-year double-digit revenue growth for Snap to $55.01 flat ad revenues for Twitter. 26.6% 37.7% 24.6% Will the Facebook ad boycott affect its 2020 22.2% 23.3% ad revenues? 19.6% 21.4% 5.9% 22.9% 19.7% The boycott will likely do more damage to Facebook’s reputation than its bottom line. While many big-name 2018 2019 2020 2021 2022 brands, including Unilever, Coca-Cola and others, have Ad revenues % change % of total digital ad spending paused spending, there is still a long tail of smaller Note: includes advertising that appears on desktop and laptop computers advertisers that will continue to advertise on the platform. as well as mobile phones, tablets and other internet-connected devices, and includes all the various formats of advertising on those platforms; includes Instagram advertising revenues; net ad revenues after companies How has social network monetization changed in pay traffic acquisition costs (TAC) to partner sites Source: eMarketer, June 2020 Q2 2020? 256484 www.eMarketer.com Commerce was top of mind this quarter for the social KEY STAT: Our updated forecast shows that Facebook’s platforms. Facebook and Instagram Shops were launched, worldwide ad revenues will grow by just 5.9% in 2020 and Snapchat introduced a new third-party app program due to the coronavirus pandemic. called Minis. Other monetization developments include the launch of IGTV ads, Facebook’s experimentation with WhatsApp payments and Snapchat’s introduction of a new video ad format, First Commercial. CONTENTS Will the gains in social network usage persist? 2 Social Media Update Q2 2020: Facebook Ad Boycott, Our new forecasts for international social network users Instagram’s IGTV Ads, Snapchat’s Developer Conference, and US time spent with social networks show increased Twitter’s Declining Ad Revenues and More user growth and engagement during the pandemic. We 3 Trend in Focus: Facebook Ad Boycott expect both trends to moderate as people eventually return to their routines. 4 Facebook 8 Instagram WHAT’S IN THIS REPORT? This report explores key developments for Facebook, Instagram, Snapchat and 9 Snapchat Twitter in Q2 2020, including our updated forecasts for 11 Twitter global social network ad revenues, US time spent with 12 Read Next social networks and international social network users. 12 Sources 13 Editorial and Production Contributors

SOCIAL MEDIA UPDATE Q2 2020 ©2020 EMARKETER INC. ALL RIGHTS RESERVED 2 TREND IN FOCUS: FACEBOOK BOYCOTT BACKGROUND AD BOYCOTT The backlash against Facebook began after protests for racial justice started sweeping across cities in the US In late Q2, major advertisers began pulling their ads and worldwide in late May. Facebook was criticized for from Facebook to protest how the company handles not removing harmful misinformation about the protests, hate speech and misinformation. While social media including false posts about potentially violent collectives ad boycotts aren’t new, this time it comes against of anti-fascist activists, or “antifa,” heading to certain areas of the US where demonstrations were being the backdrop of the coronavirus pandemic, which is held. (Similar problems existed on other platforms, but putting a strain on Facebook’s business and the larger Facebook has become the primary target as it has the ad market. most users and revenues of the major social networks.)

Brands that have paused spending, such as Starbucks, Many of the brands that have pulled spending are part of Verizon, Ben & Jerry’s, Ford and adidas, have done so the “Stop Hate for Profit” boycott, led by six civil rights to varying degrees. Some have pulled their ads for the groups including the Anti-Defamation League and the month of July on Facebook (and Instagram) only, while NAACP. The movement gained momentum in mid-June others have taken it several steps further. Unilever, for when the coalition began asking US marketers to instance, has pledged to stop US spending on Facebook, temporarily stop buying Facebook ads. The campaign said Instagram and Twitter through the end of 2020. it has now begun urging international advertisers to join in the effort as well. Coca-Cola, meanwhile, said on June 26 that it would pause all social media ad spending worldwide for 30 Other companies that have suspended their Facebook days, while UK-based beverages company Diageo said advertising have distanced themselves from the official it would indefinitely suspend all social media advertising boycott, but their end goal is ultimately the same: to globally starting on July 1. Microsoft stopped advertising pressure Facebook (and other social media platforms) on Facebook already in May. to take a stronger stand against hate speech and violent content. At the time of this writing, a precise estimate of the number of brands that have pulled spending is difficult In response, Facebook CEO announced to come by. One widely cited spreadsheet maintained in a June 26 live broadcast that the company would by Sleeping Giants, a liberal social media activism begin labeling content it deems as “newsworthy,” which organization and one of the backers of the official “Stop would otherwise be removed according to its policy. Hate for Profit” boycott, showed that the number of The policy prohibits hate speech, terrorism and language brands boycotting Facebook advertising was 1,033 as of that incites violence, among other things. The move is July 10. We think that figure is likely too high. The list is a similar to Twitter’s approach toward labeling misleading, mix of corporate entities and brand names, and there are manipulated or harmful content. multiple entries for several companies. Honda entities, for example, are listed at least three times. Zuckerberg also said that Facebook would begin prohibiting content that claims “people from a specific By comparison, social media analytics platform ListenFirst race, ethnicity, national origin, religious affiliation, caste, pegged the number of boycott participants at over 500 as sexual orientation, gender identity or immigration status of July 5. It also noted that there was a 74% reduction in are a threat to the physical safety, health or survival of new Facebook and Instagram ads by the company’s 485 others,” while updating its targeting practices to “better top advertisers during the week of July 1–5, compared protect immigrants, migrants, refugees and asylum with the average number of new ads on those same five seekers from ads suggesting these groups are inferior days between 2016 and 2019. or expressing contempt, dismissal or disgust directed at them.” Earlier in the month, Facebook had removed 80 What is clear, however, is that most of the advertisers ads from President Donald Trump’s reelection campaign that have suspended advertising are big brands, rather that it said used Nazi-linked imagery and were thus than smaller companies. against its policies.

SOCIAL MEDIA UPDATE Q2 2020 ©2020 EMARKETER INC. ALL RIGHTS RESERVED 3 Our forecast, which was finalized before the boycott REVENUE IMPACT gained significant momentum, shows that Facebook’s While a temporary boycott of Facebook advertising in the worldwide ad revenues will grow by 5.9% in 2020 to US was unlikely to materially impact Facebook’s 2020 ad $73.78 billion. (Read the next section for more on our revenues, a longer-term global suspension could make a updated forecast.) larger dent. But even if it doesn’t hurt Facebook’s bottom line, the Still, Facebook isn’t likely to face more than a small hit. boycott has the potential to damage its reputation and Facebook is primarily a performance marketing platform, that of social media more broadly. As the US (and the and many of the brands that have pulled spending are big globe) face a reckoning over systemic racism, some brands, not performance advertisers. It has a long tail of consumers feel that Facebook and other social networks smaller businesses that will continue to rely on it for its simply haven’t done enough to curb the spread of reach, targeting and attribution. Reduced ad pricing as a racist and other hateful content, all while generating result of large companies pulling their spend may actually ad revenues. increase other businesses’ spending on campaigns that may not have previously been economical. Still, the Facebook boycott is not likely to change most consumers’ perception of brands. In a July 2020 Morning Amid the growing boycott, the press has reported on Consult survey, 41% of US adults said participation estimates from marketing research firm Pathmatics of would not impact their view of a company, and 20% big-brand spending on Facebook, which indicates that the were unsure or offered no opinion. Meanwhile, 30% said top 100 advertisers accounted for 6% of its ad revenues they would have a more favorable view of a company in 2019. that participated vs. 8% who said they would have a less favorable view. Pathmatics collects information about digital ad impressions and uses a proprietary model to estimate US Adults Who Would Have a More vs. Less Favorable advertiser spending. We think some of these estimates View of a Company Participating in the Facebook Ad may be high based on company reports. For example, Boycott, July 2020 Pathmatics estimated that Carvana spent $22 million % of respondents on Instagram ads from April 15 to June 15. Assuming More favorable view 30% no seasonal effects, that would translate to $132 million No impact either way 41% in annual spending. Carvana reported in its 2019 10-K filing that its total advertising budget for the year was 8% Less favorable view $204 million. Don't know/no opinion 20%

Note: ages 18+; numbers may not add up to 100% due to rounding Facebook last shared data on its ad revenue breakdown Source: Morning Consult, "National Tracking Poll #2006150," July 8, 2020 in Q1 2019, when COO said that the 256747 www.eMarketer.com company’s top 100 advertisers made up less than 20% In terms of purchase intent, 49% of respondents in the of its total ad revenues. For context, Facebook has said it same survey said participation in the boycott would not had a total of 8 million advertisers. have any impact over their decision to buy from one brand over another. It’s also difficult to determine the exact effects of the boycott on Facebook’s ad revenues, as it comes at a time when brands had already curtailed spending due to the pandemic. In a note to clients, however, equity research FACEBOOK and trading company MKM Partners estimated that Facebook would lose less than 5% of its ad revenues due Even if the ad boycott doesn’t materially impact to the boycott. Facebook’s ad revenues this year, lost spending due to the pandemic will. Facebook’s worldwide and US ad revenues will rise in 2020, but at a much weaker rate than we had previously predicted.

SOCIAL MEDIA UPDATE Q2 2020 ©2020 EMARKETER INC. ALL RIGHTS RESERVED 4 MONETIZATION Commerce We updated our forecast for worldwide Facebook ad Also on the Q1 2020 earnings call, Zuckerberg teased revenues in June. Here are the highlights and how it a plan to start offering more ecommerce capabilities compares with our previous forecast, completed before to businesses. Ecommerce has been one bright spot the pandemic: throughout the pandemic, with physical stores closed and people turning online to buy goods. ■■ We expect Facebook’s worldwide ad revenues, including Instagram, will rise by 5.9% in 2020 to Sure enough, in May, Facebook launched Facebook $73.78 billion. In March, we expected its 2020 ad Shops, through which businesses can set up free revenues to increase by 22.2% to $85.10 billion. online storefronts on Facebook and Instagram. The shops are powered by third-party services like Shopify, ■■ Facebook will remain the world’s second-largest BigCommerce and Channel Advisor. The new service is digital ad seller after Google in 2020, with a 22.2% geared toward small businesses, which have suffered share of worldwide digital ad revenues—down from disproportionately during the pandemic due to their 23.1% in our March forecast. reliance on in-store traffic.

■■ Facebook’s US ad revenues will grow by 4.9% in According to an April 2020 survey by Facebook and 2020 to $31.43 billion. In March, we expected its 2020 the Small Business Roundtable, 31% of US small US ad revenues to rise by 22.0% to $36.25 billion. businesses had stopped operating, and another 11% Facebook reported its Q1 2020 earnings in April. Here are said they expected to fail within the next three months if the key stats: the pandemic persisted. By providing those businesses with a free tool to sell their products online, Facebook is

■■ Facebook generated $17.44 billion in Q1 worldwide helping them pivot to digital in order to stay afloat. ad revenues, up by 17% year over year. Despite the growth, Facebook said it experienced a “significant Their survival is also essential for Facebook’s bottom line, reduction” in advertising demand as well as a decline in as small businesses make up a significant chunk of its ad pricing during the last three weeks of March. advertiser base. Facebook’s Sandberg said in 2017 that more than 4 million small and medium-sized businesses ■■ Facebook’s US and Canada ad revenues came in (SMBs) advertised on the platform. Earlier this year, at roughly $8.38 billion, up from $7.20 billion in Q1 Facebook said its total advertiser base had grown to 2019. The US and Canada accounted for roughly 48% 8 million, so the number of small businesses is likely of Facebook’s worldwide revenues. much higher.

On the earnings call, Facebook CFO By helping SMBs survive the pandemic, Facebook is said the precipitous drop in revenues during March had ensuring that those businesses will continue to advertise moderated in the start of Q2. Still, revenues were flat in on the platform once the economics are there. Facebook the first three weeks of April compared with the same Shops will also create two new revenue streams for period in 2019. The company said the April trends were a Facebook. Companies will be able to buy Facebook result of “weakness across all of [its] user geographies,” ads to promote their Shops, and when customers use since most of Facebook’s major markets had some sort Facebook’s checkout option, it will charge them a fee of of shelter-in-place guidelines in effect. 5% per shipment or a flat fee of $0.40 for purchases of $8.00 or less. While Facebook didn’t provide Q2 or full-year guidance to investors, Zuckerberg acknowledged the uncertainty of In another commerce-related move, Facebook has its recovery during the earnings conference call, saying, invested $5.7 billion in India’s Reliance Jio Platforms, “I think that we’ll see a meaningful economic hit, if I had a subsidiary of Reliance Industries and the country’s to predict, for the period of the health emergency. ... I biggest telecom operator. Reliance Jio Platforms operates worry that this could be worse than at least some people ecommerce platform JioMart, as well as other services are predicting.” from music streaming to and payments.

SOCIAL MEDIA UPDATE Q2 2020 ©2020 EMARKETER INC. ALL RIGHTS RESERVED 5 Facebook is likely looking to secure its position in India’s ■■ In May, Facebook announced that its related digital competitive and fast-growing ecommerce market, which wallet Calibra was renamed Novi. Calibra was is dominated by Amazon and Walmart-backed local player introduced alongside Libra last year and was intended Flipkart. As part of the deal, consumers can now place to be the way for users to store and access the Libra JioMart orders through Facebook-owned WhatsApp. India currency once it’s available. By renaming the wallet, is WhatsApp’s largest market, with 380.7 million monthly Facebook is likely hoping to distance the app from users this year, per our latest estimates. Libra, which continues to face regulatory pressure. Facebook has not provided a launch date for Libra or Payments Novi yet but said that an early version of Novi would be launched when the Libra network is available. Facebook’s ambition to become a major player in the payments space was curtailed once again in Q2. Roughly Political Ads Update one week after rolling out WhatsApp payments in Brazil, the country’s central bank suspended the service in late Facebook has made two important changes to how it June. In a statement, Brazil’s central bank suggested it polices political content on its platform. The company had not had enough time to review the service before the announced in June that it would block ads from rollout and said it made the decision to suspend in order state-controlled media outlets targeted to people in the to “preserve an adequate competitive environment.” US. The move followed the introduction of labels on content from state-controlled media outlets, an initiative Had the service not been suspended, it would have the company first announced several months ago. been the first time that Facebook was able to conduct a nationwide rollout of WhatsApp payments, which Along the same vein, Facebook has also expanded its supports peer-to-peer (P2P) transfers between users as ID verification to profiles with large audiences in the US. well as in-store payments. Facebook has been testing As it has done with Pages since 2018, Facebook will WhatsApp payments in India for the past two years verify the identity of people with a pattern of inauthentic but has yet to receive regulatory approval to expand behavior and/or whose posts have gone viral in the US, the service. WhatsApp payments are also being tested likely in an effort to prevent election meddling. in Mexico. After India, Brazil is WhatsApp’s second-largest market, AUDIENCE with 103.6 million monthly users this year, compared with 59.9 million for Mexico, according to our forecast. We updated our forecast for international Facebook users, excluding the US and the UK, in June. Here are Earlier in the quarter, Facebook’s struggling the highlights: cryptocurrency project, Libra, and its related digital wallet, Calibra, also underwent some (additional) changes. ■■ The Middle East and Africa will be Facebook’s fastest-growing region in 2020, with a year-over-year

■■ In April, the Libra Association announced a new, user growth rate of 8.9%. Four of Facebook’s top five scaled-down plan that would offer multiple digital coins growth markets—Saudi Arabia, Nigeria, Egypt and the pegged to individual currencies as well as a combined United Arab Emirates—are located in the region. Libra currency. That would make it similar to existing ■■ The rest of Facebook’s 10 fastest-growing markets digital payment services like PayPal and potentially ease are also developing countries: India, Indonesia, concerns among US lawmakers who fear that Libra Brazil, Vietnam, the Philippines and South Africa. could compete with the US dollar. Developed countries in Europe will experience slower growth.

■■ In terms of net monthly users, India will remain Facebook’s largest market in 2020. We expect it will have 262.1 million users this year.

SOCIAL MEDIA UPDATE Q2 2020 ©2020 EMARKETER INC. ALL RIGHTS RESERVED 6 Our forecast for US and UK Facebook users, as well as Video US and UK Instagram, Snapchat and Twitter users, will be available in August. We will issue our updated worldwide In late April, Facebook introduced several new video forecast for all four social networks in Q4. products, including:

In its earnings report, Facebook said it had 2.60 billion ■■ Messenger Rooms: Facebook’s answer to monthly active users (MAUs) worldwide as of Q1 2020, videoconferencing platform Zoom, Messenger up by 9.6% year over year. Here’s how Facebook’s Rooms allows people to start a video call through audience breaks down worldwide: Facebook or Messenger with up to 50 people for free. There’s no time limit, and users don’t need to have a ■■ North America: 253 million MAUs, up from 243 million Facebook account to join. In June, Facebook expanded in Q1 2019. Messenger Rooms to its Portal smart display and videophones, along with new AR functionalities for the ■■ Europe: 406 million MAUs, up from 384 million in video-calling device, like backgrounds and virtual cards Q1 2019. that users can send to each other while on the call.

■■ Asia-Pacific: 1.09 billion MAUs, up from 981 million in ■■ WhatsApp Group Calls: Facebook announced that it Q1 2019. would be expanding WhatsApp Group Calls to up to eight people at a time. As of late April, more than ■■ Rest of World: 851 million MAUs, up from 768 million 700 million WhatsApp and Messenger accounts in Q1 2019. participate in calls every day, Facebook said. Facebook also reported that it closed Q1 2020 with ■■ Facebook Live: Updates to Facebook’s live video 2.99 billion monthly active people (MAP) across its family service include bringing back “Live With,” which of apps, including Facebook, Instagram, Messenger and allows users to add a guest speaker to their video WhatsApp. That represents a year-over-year increase regardless of where they are, as well as integration of 11.2%. with Facebook Events. Users will be able to mark The strong usage gains were due to shelter-in-place events as online-only, and creators and businesses will measures that kept people home, and executives be able to charge guests for access to their events on cautioned that some of these usage gains may not last Facebook Live. once people return to school and work. With the expansion of its video services, Facebook is hoping to capitalize on the growing use of “We expect that we will lose some of this increased videoconferencing and calling during the pandemic. Zoom engagement when shelter-in-place restrictions are relaxed has been one of the major beneficiaries of the new trend, and life returns to a more normal cadence,” Facebook as many consumers have started using the enterprise CFO Wehner said. communications app to keep in touch with friends and family. According to a March 31 Business Insider Our Facebook user forecast also assumes that elevated Intelligence survey, 31.5% of US adults used Zoom to usage levels will begin to moderate as people return to chat with friends and family during the pandemic. their normal routines. We believe this will start to happen later this year. eMarketer and Business Insider Intelligence have joined Facebook’s reported figures differ from ours because forces to become the leading research company focused we factor out duplicate, fake, nonhuman and on digital transformation. As we come together as Insider business accounts. Intelligence, you will see content from Business Insider Intelligence in eMarketer reports and articles.

SOCIAL MEDIA UPDATE Q2 2020 ©2020 EMARKETER INC. ALL RIGHTS RESERVED 7 But whether Facebook will be able to convince users Instagram’s ad revenue growth rate is the highest of to use Messenger Rooms after the pandemic is an the four major social networks we track. The app has open question. It’s unlikely that there will be many long been considered a major driver of Facebook’s total consumer-facing use cases for videoconferencing as growth, and it seems to have been more resilient than its shelter-in-place measures are being lifted and in-person sister app to the impact of COVID-19. That’s likely thanks gatherings return around the world. At the time of this in large part to its use for digital shopping and , writing, many people are also already complaining of both of which have continued to see increased usage “Zoom fatigue,” which is exhaustion from spending too during the pandemic. much time on video calls with work and friends. Facebook does not publicly report Instagram revenues. Facebook Live may have more success, however. People are likely to remain wary of large gatherings, like IGTV Ads Update in cinemas and concert halls, and may opt for a digital alternative, especially if it’s less expensive. In a March As we reported last quarter, Instagram has officially GlobalWebIndex survey, for example, 28% of US and UK launched IGTV ads. The company began testing the internet users said they were watching more live videos long-awaited ad format for its longer-form video service in during the coronavirus pandemic. early June among a select group of major advertisers and roughly 200 English-language creators.

The initial round of ads will be limited to 15 seconds INSTAGRAM long and will run only when users click to watch IGTV videos from previews in their feed (as opposed to clicking Instagram’s ad revenues will grow the fastest of through from the Explore tab or a creator’s profile). the four social networks we track in 2020. Increased Instagram’s COO Justin Osofsky told The Verge that engagement during the pandemic, along with new Instagram wouldn’t initially take a cut of revenues but ad formats and commerce capabilities introduced in would eventually introduce a revenue-sharing program similar to that of YouTube. Q2 will continue to attract advertisers to the platform. Still, its 2020 growth rate will be lower than we expected previously. Acquisition In May, Facebook acquired Giphy, an online database for animated GIF files, as part of the Instagram team. MONETIZATION Under the deal, which was reportedly worth roughly $400 million, Giphy would be integrated into Instagram, We updated our forecast for worldwide Instagram ad as well as Facebook’s other apps. All of Facebook’s family revenues in June. Here are the highlights and how of apps already worked with Giphy prior to the acquisition, it compares with our previous forecast, which was and Facebook said in the announcement that 50% of completed before the pandemic: Giphy’s traffic comes from its services, with half of that coming from Instagram alone. ■■ We expect Instagram’s worldwide ad revenues to rise by 38.2% in 2020 to $27.64 billion. In March, The Giphy acquisition could help Facebook better we expected its ad revenues to increase by 59.4% to monetize its messaging services, including Instagram $31.88 billion. Direct, WhatsApp and Messenger. Giphy’s main revenue source is sponsored from brands, and combined ■■ Instagram’s US ad revenues will grow by 29.3% in with Facebook’s wide advertiser base, it could be a new 2020 to $16.03 billion. In March, we expected its 2020 revenue source for the company. It could potentially US revenues to rise by 59.4% to $18.49 billion. also help Facebook monetize traffic on rival social and messaging apps, as GIFs created in Giphy are shared on Twitter, TikTok and Snapchat as well.

SOCIAL MEDIA UPDATE Q2 2020 ©2020 EMARKETER INC. ALL RIGHTS RESERVED 8 According to a June Reuters report, however, Facebook has paused the Giphy integration pending a probe into the acquisition by the UK’s Competition and Markets Authority for reducing competition. Facebook has said that the acquisition wouldn’t change Giphy integrations with other social platforms. Commerce Along with introduction of Facebook Shops (which users can also find through Instagram), Instagram has also updated its Instagram Shopping service. Any creator or business with at least one eligible product can use shopping tags to drive people to a website for completing a purchase. US businesses participating in Instagram Checkout can drive people to an in-app purchase.

AUDIENCE We updated our forecast for international Instagram users, excluding the US and the UK, in June. Our worldwide forecast, which includes the US and the UK, For more on usage trends for Instagram and the other will be available in Q4. Here are the highlights from our major social properties, see our June 2020 report “US international forecast: Social Media Usage: How the Coronavirus Is Changing Consumer Behavior.” ■■ The Middle East and Africa will be the fastest- growing region for Instagram in 2020. We expect the number of Instagram users to rise by 24.5% over 2019, compared with 18.1% for Asia-Pacific and 13.8% for SNAPCHAT Latin America. Snapchat’s strong Q1 earnings were a positive sign ■■ The five fastest-growing countries for Instagram are for the platform, which has continued to see strong all developing markets. They are India, Mexico, Japan, engagement during the pandemic. The rollout of the Philippines and Brazil. Facebook has not updated its new ad formats, like First Commercial, and a heavier Instagram user figures since July 2018, when it said it had more than 1 billion MAUs worldwide. reliance on large, rather than small, advertisers will help the platform grow its revenues in 2020, though Time Spent at a slower rate than we previously predicted. In April, we released our updated forecast for US time spent with social networks. Thanks to increased engagement through features like Instagram Live and MONETIZATION Stories, Instagram will receive a substantial boost in time We updated our forecast for worldwide Snapchat ad spent this year. revenues in June. Here are the highlights and how it compares with our previous forecast, which was We estimate US adult users will spend an average of completed before the pandemic: 30 minutes per day on the network in 2020, up from

26 minutes in our previous forecast. That’s on par with ■■ We expect Snapchat’s worldwide ad revenues to Snapchat, and a greater increase than for Facebook. increase by 24.1% in 2020 to $1.87 billion. In March, Those increases won’t last into 2021, however. we expected Snapchat’s 2020 worldwide ad revenues to rise by 46.1% to $2.20 billion.

SOCIAL MEDIA UPDATE Q2 2020 ©2020 EMARKETER INC. ALL RIGHTS RESERVED 9 ■■ Snapchat’s US ad revenues will rise by 17.5% ■■ The expansion of premium content on its Discover to $1.03 billion in 2020. In March, we expected Tab. The company reached multiyear extensions Snapchat’s 2020 US ad revenues to reach $1.20 billion, with current partners—like Disney, NBCUniversal up by 37.1% from 2019. and ViacomCBS—to produce premium content like sports highlights and news commentary. Snap is Snap reported its Q1 2020 earnings in April. Here are the also introducing a slate of 10 scripted and unscripted key stats: originals. The platform’s premium video content has seen robust growth. According to its Q1 earnings, the ■■ Snap reported $462 million in Q1 worldwide total daily time spent on Discover content grew 35% revenues, up by 44% over Q1 2019. Worldwide year over year, and more than 60 shows saw a monthly revenues grew about 58% in January and February, audience of over 10 million viewers. before falling to 25% in March. ■■ Social commerce opportunities in Minis. Snap ■■ North America revenues reached $316 million in Q1, unveiled a new third-party app program called Minis up by 40% year over year. That equates to roughly that will live inside the app’s Chat section. Minis will 68.4% of Snap’s worldwide revenues. allow users to do things like order movie tickets or compare class schedules. Developers can build their ■■ Direct-response advertising now represents more than half of Snap’s total revenues. Snap said own apps, which can be shared between users through revenues from direct response have nearly doubled Chat. The new feature is reminiscent of Mini Programs over the past two years. on China’s super app WeChat and could help expand social commerce opportunities on Snapchat. Snap didn’t provide guidance for Q2, citing uncertainty related to the worldwide economic recovery. But it took ■■ Advancements in Lenses tech including voice the unusual step of providing revenue growth figures activation and scan. New updates include new for the first few weeks of April. It said that from April voice-activated lenses (“Hey Snapchat, turn my 1 to 19, worldwide revenues grew an estimated 15% hair pink”), expansions of visual search (Snapchat compared with the same period in 2019. In the week can identity different types of plants and dogs), and before April 19, growth was an estimated 11%. Although SnapML, which lets users upload their own computer those percentages are well below what the company saw vision models for the creation of new filters and AR- in Q1, the fact that Snap saw gains at all in the first few related applications. Snap said in April that more than weeks of the quarter was a positive sign. 75% of its daily active users (DAUs) use AR features on a regular basis. The advertiser mix on Snapchat may have helped its performance in Q1 and may have continued to help it in First Commercial and Snap Select Q2. It has relatively fewer small-business advertisers than In April, Snapchat announced the launch of First Facebook and Instagram do, and more large advertisers Commercial, which allows advertisers to own the initial have been willing to commit to using Snapchat on a ad a user sees while watching a Show. The launch regular basis. In prepared remarks delivered during the came almost exactly one year after the introduction of investor conference call, Jeremi Gorman, Snap’s chief “Snap Select,” a program that allows advertisers to buy business officer, said the company “doubled the amount 6-second, unskippable Commercials for content bundles of money committed via upfronts in 2020 vs. 2019.” at a fixed CPM rate.

Snap Partner Summit At the same time, Snap also expanded to Snap Select to include five content bundles from the original two. The While most major tech conferences were canceled, five bundles are Sports, Entertainment, Beauty, Lifestyle including Facebook’s F8 developer summit, Snapchat and News. went ahead with its second-ever Snap Partner Summit on June 11. The event was held virtually in light of continued coronavirus fears. Here are the major highlights for marketers:

SOCIAL MEDIA UPDATE Q2 2020 ©2020 EMARKETER INC. ALL RIGHTS RESERVED 10 AUDIENCE TWITTER We updated our international Snapchat user forecast, Twitter is the only one of the major social networks excluding the US and UK, in June. Here are the highlights: whose revenues we expect will decline in 2020 as a

■■ Snapchat’s user growth will decelerate in all regions result of the pandemic. The company posted flat ad in 2020, except the Middle East and Africa. The revenues in its Q1 2020 earnings but warned that its strong growth for both TikTok and Instagram in most business was suffering in April. Lost ad spending from regions is partially responsible for the downward trend. event cancellations and postponements will hurt Twitter’s 2020 revenues even as some events return ■■ The number of Snapchat users in India will rise by 28.0% in 2020 to 18.5 million. That will make it Snap’s later in the year. No. 2 market worldwide, after the US.

■■ Snapchat’s fastest-growing country in 2020 will be Austria, posting 30.1% user growth. That’s up from MONETIZATION 3.3% in 2019. We updated our forecast for worldwide Twitter ad revenues in June. Here are the highlights and how Snap does not publicly disclose monthly usage figures; it it compares with our previous forecast, which was publishes information about its DAUs only. Snap reported completed before the pandemic: it closed Q1 2020 with:

■■ We expect Twitter’s worldwide ad revenues will ■■ Worldwide: 229 million DAUs, up by 20% from decline by 7.5% in 2020 to $2.72 billion. In March, we Q1 2019. expected Twitter’s revenues to increase by 12.3% to $3.30 billion. ■■ North America: 88 million DAUs, up by 10% from Q1 2019. ■■ Twitter’s US ad revenues will fall by 3.7% in 2020 to $1.54 billion. In March, we expected Twitter’s US ■■ Europe: 70 million DAUs, up by 14% from Q1 2019. revenues to rise by 15.6% to $1.85 billion. ■■ Rest of World: 71 million DAUs, up by 45% from Q1 2019. Twitter reported its Q1 2020 earnings in April. Here are the key stats: The user gains may have coincided with the pandemic, but Snapchat said it was already on pace to see strong ■■ Twitter reported $682 million in Q1 worldwide ad growth in DAUs in the quarter before the final weeks revenues, which is essentially flat (0.4% growth) when the crisis accelerated. That said, CEO Evan Spiegel compared with Q1 2019. A strong January and revealed in the earnings call that the pandemic did February was enough to partially offset the 27% contribute to increases in time spent and communication decline the company reported in its ad business during on Snapchat. March 11–31.

Spiegel said communication with friends was up more ■■ Twitter said that the March downturn was than 30% in the last week of March vs. the last week of “particularly pronounced” in the US, where Q1 2020 January—and in some markets there was an increase of ad revenues reached roughly $381 million. The US is more than 50%. Spiegel also noted that chat, calling and Twitter’s largest market. games were highlights for group engagement. Twitter didn’t provide Q2 guidance, citing economic uncertainty due to the coronavirus pandemic. In the Average time spent was up more than 20% in the last earnings call, however, CFO Ned Segal told investors that week of March vs. the last week of January. Some the March 11–31 timeframe would serve as a preview for markets, such as France and the UK, saw more than a what to expect for its ad business in April. That suggests 30% increase, he said. Spiegel didn’t provide data on time that the Q1 earnings did not include the full impact of spent in the US, however. the coronavirus pandemic and economic slowdown on Twitter’s business.

SOCIAL MEDIA UPDATE Q2 2020 ©2020 EMARKETER INC. ALL RIGHTS RESERVED 11 Twitter’s ad business is heavily event-driven, and The company reported that it closed Q1 2020 with: event cancellations as a result of social distancing and stay-at-home measures have clearly hurt its bottom line. ■■ Worldwide mDAUs: 166 million, up 24% year The continued suspension of major US sports leagues over year. and postponement of the 2020 Summer Olympics will likely negatively impact its revenues in Q2 as well. ■■ US mDAUs: 33 million, up 17% year over year.

■■ International mDAUs: 133 million, up 26% year Direct Response over year. Direct-response advertising has been a thorn in Twitter’s Twitter also said that it added 14 million average mDAUs side for years, and getting it right has become an even in Q1 2020 over the previous quarter—its highest-ever bigger priority given the current situation. By improving growth. Most of the growth took place in March, when its direct-response ad offerings, Twitter said in its Q1 Twitter said it saw “a significant acceleration... as the earnings call that it hopes to increase its addressable pandemic became global.” market, “with more access to advertising demand that may be more resilient through an economic downturn.” But there are signs that Twitter’s usage gains may be short-lived. By the end of March, Twitter said that the Twitter said it aims to accelerate its road map for number of mDAUs had stabilized “as many people around direct-response advertising, beginning with improvements the world settled into new routines.” to its mobile application promotion (MAP) ad format. During the earnings call, Twitter also said the new offering It’s also important to note that Twitter’s mDAU figures are was being tested among a select group of advertisers and more a reflection of increased user engagement, rather that there will be a phased expansion of the pilot. than an influx of new users to the platform. That makes them difficult to compare with other social networks. AUDIENCE We updated our forecast for international Twitter users, READ NEXT excluding the US and UK, in June. Here are the highlights: US Social Media Usage: How the Coronavirus Is ■■ Seven of the markets we track will have a user Changing Consumer Behavior growth rate of around 10% in 2020, including India, Social Media Advertising in Q2 2020 and Beyond: How the Netherlands and Germany. Twitter has benefitted the Coronavirus Will Affect Ad Prices, Spending Plans from the increased need for news during the pandemic. and More

■■ Japan will add over 3.5 million new monthly Twitter users in 2020. That brings its total user base in the SOURCES country to 40.2 million—second only to the US. Business Insider Intelligence ■■ In absolute terms, India will add the most Twitter users (4.6 million), bringing its user base to GlobalWebIndex 31.9 million in 2020. Brazil will also add 3.0 million ListenFirst Twitter users, resulting in a total of 35.4 million Twitter Morning Consult users in the country. Pathmatics Twitter does not publicly disclose monthly user figures. The Small Business Roundtable Instead, it focuses on monetizable daily active users (mDAUs), or users who log in to their account at least World Federation of Advertisers once per day from Twitter applications that are capable of showing ads.

SOCIAL MEDIA UPDATE Q2 2020 ©2020 EMARKETER INC. ALL RIGHTS RESERVED 12 EDITORIAL AND PRODUCTION CONTRIBUTORS

Anam Baig Senior Editor Joanne DiCamillo Senior Production Artist Donte Gibson Chart Editor Katie Hamblin Chart Editorial Manager Dana Hill Director of Production Erika Huber Copy Editor Ann Marie Kerwin Executive Editor, Content Strategy Stephanie Meyer Senior Production Artist Heather Price Deputy Editor Magenta Ranero Senior Chart Editor Amanda Silvestri Senior Copy Editor

SOCIAL MEDIA UPDATE Q2 2020 ©2020 EMARKETER INC. ALL RIGHTS RESERVED 13 The leading research firm for marketing in a digital world.

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