Strong ad show from Alphabet, Snap puts the spotlight on Meta

By Samrhitha A and Aditya Soni

(Reuters) - A rebound in the advertising businesses of Google and Snap has signaled that the rising adoption of artificial intelligence was drawing marketers to digital platforms even in an uncertain economy, boding well for Facebook-parent Meta Platforms.

Alphabet and Snap surpassed third-quarter revenue expectations on Tuesday, with the tech giant seeing strong growth both at its core Search and YouTube units.

"AI is helping advertisers find as many people as possible and their ideal audience for the lowest possible price," said Philipp Schindler, chief business officer at Google.

The company has been doubling down on the technology with tools such as Performance Max, which uses AI to decide how marketing budgets should be distributed across Google's ad network.

Meanwhile, Snap's efforts to revamp its ad targeting tools with technology also paid rich dividends, as average revenue per user increased in the third quarter.

Meta, which gets nearly all its revenue from ads, will report earnings after markets close on Wednesday. Wall Street expects the company to report its best quarterly sales growth in nearly two years.

The results suggest the ad market recovery remains on track, analysts said, led by spending from retail companies. They pointed to Google and Meta as potentially the biggest beneficiaries.

"We expect the larger platforms like Meta and Google to lead the wallet share growth at least initially in this ad spend recovery," analysts at Evercore ISI said.

The companies are seen as more resilient to uncertainty fueled by geopolitical turmoil such as the conflict in Middle East as their wider reach helps attract a steady stream of advertisers.

Meta has also leaned heavily on AI-powered marketing planning and ad measurement features in recent years to drive its growth.

"Facebook/Instagram's tools for creating a (marketing) campaign are vastly quicker and easier to use" than smaller rivals including Snap, RBC analysts said, which could potentially give Meta an edge.

(This story has been refiled to correct the syntax in paragraph 1)

(Reporting by Samrhitha Arunasalam and Aditya Soni in Bengaluru; Editing by Sriraj Kalluvila)