The digital advertising industry is by far one of the largest industries on the planet at the moment.
Without digital advertising campaigns, most businesses would struggle to sell their products and services. With that said, here’s a look at the 8 best online advertising stocks you could invest in.
Best Online Advertising Stocks To Watch
The Trade Desk (NASDAQ: TTD)
Unlike most advertising agencies and market platforms that display ads, The Trade Desk is an advertising technology platform that allows ad buyers to create, manage and optimize their ad performance.
TTD is a demand-side platform (DSP) that helps advertisers buy and manage online advertising campaigns across numerous channels.
It uses artificial intelligence and real-time bidding to guarantee that ad performances are fully optimized.
The company has an impressive customer retention rate, reporting a 95% customer retention rate in Q3 2022, which it has maintained for 18 straight quarters.
The Trade Desk reported total revenue of $1.20 billion in 2021, and in 2022 reported total revenue of $1.58 billion.
Its exponential growth rate earned Trade Desk its spot as the 6th fastest-growing company in 2021.
With a year-over-year revenue growth rate of 31.87%, TTD is estimated to make a revenue of $1.89 billion in 2023.
Alphabet Inc. (NASDAQ: GOOGL)
One of the most prominent names in the world of advertising is Alphabet Inc, the parent company of Google, the world’s largest search engine.
Alphabet Inc. is the largest search and video advertising company on the internet.
With platforms like AdWords, AdSense, and DoubleClick, it controls 40% of the market share in digital advertising.
Alphabet has seen its total Google ad revenue rise to $50.44 billion thanks to the uptick in ad spending on its platform.
In 2022, it made a total revenue of $282.84 billion at the end of the fiscal year and has year-over-year revenue growth of 9.78%.
GOOGL predicts a 5,5% growth in its sales earnings in 2023, an estimated $298 billion worth of sales.
Alphabet Inc. currently dominates the advertisement world with a market cap of $1.15 trillion, roughly trading at $90.6 per share.
Amazon, Inc. (NASDAQ: AMZN)
Global conglomerate and e-commerce giant Amazon is rapidly expanding its online advertisement service.
With its advertising revenue growing exponentially in recent years, Amazon is now the third-largest digital ad platform in the US. Alphabet Inc. takes first place.
The company sells advertising space on its various platforms to all kinds of businesses intending to compete with big technology firms that use advertising as a source of revenue.
In 2021, amazon reported that on its video streaming platform, its advertisement content had reached more than 120 million per month.
It has a market cap of $960.78 billion and made a total revenue of $513.98 billion in 2022 at the end of the fiscal year.
Analysts have also estimated that the company would make total revenues of $557.74 billion and $629.83 billion at the end of the fiscal years 2023 and 2024, respectively.
Roku (NASDAQ: ROKU)
Together with its subsidiaries, Roku operates a TV streaming platform and generates a portion of its revenue from advertisements.
It offers advertising products such as display ads, video ads, and sponsored content.
As more and more people leave cable tv for streaming platforms, Roku has been growing rapidly.
It has shown a rise in total revenue from 2020 to 2022, with a $1.35 billion increase.
In 2020, the company’s average revenue per user grew by 32% year-over-year in the first quarter.
It also recorded a generated revenue, gross profit growth, and Adjusted EBITDA in the first quarter and saw its streaming hours increase by 49% year-over-year.
Roku ended the 2022 fiscal year with a total revenue of $3.13 billion and is estimated to make a total revenue of $3.28 billion in 2023 and $3.87 billion in 2024.
Omnicom Group (NYSE: OMC)
Omnicom Group offers solutions for advertising, customer relationship management, public relations, and corporate communications services.
It is one of the largest marketing communication companies in the world.
Omnicom Group’s client base is divided into 15 industries and boasts diversified revenue streams.
These industries include the technology, auto, and healthcare industries. But, it doesn’t make up for more than 20% of its revenue.
The company comprises three different advertising agencies: BBDO, DDB, and TBWA.
And the bulk of its income comes from advertising. In fact, in Q3 2021, 53% of its total revenue was from advertising.
Omnicom Group has a market cap of $18.45 billion and a gross profit margin of 19.31%.
They recorded a revenue of $14.29 billion last year, and unlike most of their competitors, they pay dividends, recording a yield of 3.08% and an annual payout of $2.80.
Based on its financials and the quality of its service, we consider the company a good advertising agency stock to own as we continue into the golden age of the advertising industry.
The Interpublic Group of Companies, Inc. (NYSE: IPG)
Founded in 1930, The Interpublic Group of Companies, Inc. is a company that provides advertising and marketing solutions worldwide.
The company has two sections that provide online advertising and digital marketing: Media, Data, and Engagement Solutions and Integrated Advertising and Creativity Led Solutions.
The company was formerly called McCann-Erickson Incorporated and later changed its name in 1961.
Headquartered in New York, The Interpublic Group of Companies Inc. had a total revenue of $10.93 billion at the end of the 2022 fiscal year.
Investors stand a chance to earn dividends, with IPG recording a yield of 3.48% and an annual payout of $1.24 on a ratio of 42.18%.
Thryv Holdings (NASDAQ: THRY)
Similar to The Interpublic Group of Companies Inc., Thryv Holdings is also a company that provides digital marketing solutions.
It provides cloud-based tools to small-to-medium-sized businesses (SMBs).
The company uses digital media solutions, such as online display and social advertising, online presence and video, and search engine optimization (SEO) tools.
It also offers Thryv, an SMB end-to-end customer experience platform.
The company offers Marketing Center, a marketing and advertising platform for paid ad campaigns with automated recommendations, landing page creation, and tagging.
Like The Trade Desk (TTD), THRY is one of the newer categories in advertising stocks. It helps simplify businesses’ online presence by saving them money, resources, and time.
The company went public in 2020 and has a market cap of $840.90 million.
In 2022, it had a total revenue of $1.20 billion and a gross profit margin of 64.90%. However, the company does not currently pay dividends.
Magnite, Inc. (NASDAQ: MGNI)
Magnite Inc. is a sell-side platform (SSP) that provides a technology platform for programmatic advertising.
The company offers applications and services for sellers of digital inventory. It also enables publishers to sell their ad inventory to a range of buyers in real time.
The Los Angeles-based company was founded in 2007 and changed its name in 2020 after merging with Talaria. It was formerly known as the Rubicon Project.
In 2021, Magnite acquired SpotX for $1.17 billion as it seeks to invest more in digital advertising.
And in 2022, the company had total revenue of $577.07 million.
It has a year-over-year revenue growth rate of 23.20% and a market cap of $1.56 billion.
Although Magnite currently doesn’t pay dividends, hypothetical analysis shows that if it did, it would yield 0.50% at an annual payout ratio of 10%.
Are Online Advertising Stocks a Good Investment?
The rapid growth of the internet, combined with the increasing ease of use of social media platforms and other digital services, has led to an increase in the number of businesses investing in online advertising.
And as such, the social media companies that facilitate online advertising have produced exponential returns for investors over the past decade.
Advertising agency stocks have also yielded great profits in the past due to their involvement in the digital advertising ecosystem.
Currently, they appear to be primed to produce more profits in the coming decades due to the sheer number of people who are now open to shopping online.
Additionally, due to the increased presence of mobile devices in recent years, mobile advertising has become a popular avenue for businesses to capitalize on.
All in all, online advertising stocks provide investors with an exciting opportunity, offering strong returns, low volatility, and the potential for growth.
What Is The Best Social Media Stocks?
It’s hard to call any one particular social media stock the best. However, the likes of Pinterest, Snapchat, and Facebook have dominated the social media space to a large degree over the years.
What Are The Top Public Digital Advertising Companies?
Regarding pure revenue, WPP, Omnicom, and Publicis Groupe are some of the best advertising agency stocks.