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Key Digital Trends Revealed By Big Tech’s Q3 Earnings (Thinks Out Loud Episode 330)

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Every quarter, we pay close attention to what the Big Tech players — Apple, Google, Facebook, Amazon, and Microsoft (AGFAM), plus Shopify and others — have to say about the state of digital. Their earnings calls often reveal key digital trends that we all need to know about if we’re going to compete. And, obviously, the last year in particular has revealed more than most.

So, what is the current state of digital? What do Apple and Google and Facebook and Amazon and all the rest tell us about the shift to digital? Was 2020 a one-time event? Or is there a deeper shift going on? What do their messages to the market tell us about the state of the industry? And, most importantly, what do they reveal about how you can compete with these digital leaders?

This episode of Thinks Out Loud looks at what each of these companies told us about the last quarter and what that means for your business. We examine key trends that their public statements tell us about customers and competition. And we break down how you can use this information to grow your business in Q4… and beyond.

Want to learn more? Here are the show notes for you.

Thinks Out Loud Episode 330: Key Digital Trends Revealed By Big Tech’s Q3 Earnings Headlines and Show Notes

Show Notes and Links

Here are the regular show notes detailing links and news related to this week’s episode. Be sure to check out all the links that matter for your business once you’ve given the episode a listen.

Free Downloads

We have some free downloads for you to help you navigate the current situation, which you can find right here:

Thinks Out Loud is sponsored by SoloSegment: SoloSegment increases large-enterprise, B2B website conversion with easy-to-install software that automatically connects website visitors to the content they need to see to achieve their goals. SoloSegment does this using anonymous data and machine learning ensuring privacy compliance, addressing the many anonymous visitors, and improving the efficiency of marketing teams. Visit SoloSegment.com.

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Contact information for the podcast: podcast@timpeter.com

Past Insights from Tim Peter Thinks

You might also want to check out these slides I had the pleasure of presenting recently about the key trends shaping marketing in the next year. Here are the slides for your reference:

Technical Details for Thinks Out Loud

Recorded using a Heil PR-40 Dynamic Studio Recording Mic and a Focusrite Scarlett 4i4 (3rd Gen) USB Audio Interface into Logic Pro X for the Mac.

Running time: 18m 09s

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Transcript: Key Digital Trends Revealed By Big Tech’s Q3 Earnings (2021)

Well, hello again everyone. And welcome back to Thinks Out Loud, your source for all the digital marketing expertise your business needs. I’m Tim Peter, and this is episode 330 of The Big Show. Thank you so much for tuning in. I think we got a really cool show for you this week.

Apple, Google, Facebook, Amazon, Microsoft (AGFAM) Q3 2021 Earnings

Now, as you are well aware, I pay pretty close attention to the quarterly earnings of the big digital players, AGFAM as I call them. The AGFAM. Apple, Google, Facebook, Amazon, Microsoft. And I want to be fair. Facebook is changing its name to Meta. So you could argue that it’s supposed to be like AGMAM now, but if we’re really being honest, Google changed its name to Alphabet years ago. So what is that? AAMAM or something? Look, I’m not going to call them Meta. I’m not going to call Facebook Meta anymore than I call Google Alphabet. You know who I mean when I talk about these folks so we can let their corporate restructuring/brand laundering exercises kind of slide. And we’re going to talk about them as the people we know them to be.

What Big Tech’s Earnings Tell Us

And one of the reasons that I pay attention to their quarterly earnings is because they give us so much useful information about where they think the world is going. Whether or not they think things are moving in a positive direction or a negative direction, or sort of a sideways direction. So it’s super, super helpful to pay attention to what they’re thinking and doing and willing to commit to publicly. I also include Shopify in this group because they’re such a bellwether for what smaller businesses are doing digitally. So that’s what I’ve been looking at the last couple of weeks is paying attention to earning statements and trying to intuit where these folks are going. I think it’s particularly important as we begin to emerge from the pandemic focused world to the post pandemic world, to understand if the changes that we saw during the pandemic are enduring or whether it was a one time event.

What We’re Not Talking About… Yet

Now, there are lots of things we could talk about that came out of these earnings calls. The role of social in society, and in particular, Facebook’s role there. The regulation of digital, whether government regulation or things like Apple’s App Tracking Transparency or ATT system that was designed to protect user privacy. We could talk about the future of digital and the move towards the metaverse and all of these I promise I will come back to in future episodes. They’re all incredibly important discussions.

Are We Still Living Through a Big Shift to Digital?

But at this particular moment, I want to start with what their financials say about where the shift to digital is broadly. As I mentioned a moment ago, throughout much of the last year, I’ve talked about us living through a transformative event towards digital. We saw 10 years of digital transformation in 10 months. And again, this question of, is this a one time thing or did it represent a fundamental change in the way we do things forever?

And the answer appears to be a little bit of both. Every one of the companies that I took a look at, and it’s all the people you would expect, AGFAM. Apple, Google, Facebook, Amazon, Microsoft, and Shopify, and some others. They all had fantastic growth, significant double digit numbers over last year, 30%, 40%, which that’s particularly notable because last year’s growth was insanely high. We’ve hit, these companies have hit these growth numbers off a significantly higher base than where they were in let’s say 2019 or 2018. At the same time, their growth numbers were more in line, they were more typical of what we were seeing before 2020. Again, 35% growth, not 100% growth.

The Headwinds Hurting the Shift to Digital

Another thing that was very interesting to me is that almost every single one of these companies talked about various headwinds they’ve encountered. It’s tough to get labor, supply chain issues are limiting advertiser spend if they’re an ad focused company, fulfillment, if they’re a commerce based company, or in many cases, both. More customers are able to go to stores instead of being forced to shop online. And there was a certain amount of less shopping online as customers got out in the world and traveled in Q3, which by the way is very normal. There’s a reason why most companies and why most economists look at seasonally adjusted numbers, because we know Q3 tends to be a quieter retail month while people are on vacation and the like. And especially the ad driven folks, Facebook in particular, but also Shopify, noted how Apple’s App Tracking Transparency, suppressed some advertiser’s ability to track the effectiveness of their spend and as a result, caused lower spend. So that’s a real topic that we need to dive into as we go forward.

We’re Seeing Signficant Growth in Digital Off a Dramatically Larger Base

And yet, despite these headwinds, they still saw 30% growth, 35% growth, 40% growth. So the key takeaway here is that the shift to digital continues in a big, big way. Facebook, Sheryl Sandberg said the strong e-commerce growth in recent quarters was driven in part by the acceleration of digital transformation that has now tapered out. And I’m going to skip ahead. She said that doesn’t mean e-commerce has stopped growing. Businesses are still making the shift online, but e-commerce is no longer growing at the of pace it was at the height of the pandemic. Amazon, we said, we think that the growth will be suppressed for the 4 quarters that end the middle of Q2 next year. So that’s 2022. A lot of that was again getting two years of volume growth on top of one year. When we look at Shopify, they noted that they’re back to normal growth levels. Gross merchandise volume growth was down to 35 to 50%, depending on which part of their business you talk about. So even that slower growth, if you consider 35 to 50% slow, is off a base that’s twice as large as it was.

But the Generational Shift of 2020 Was Probably a One-Time Event

So the big takeaway here is that the growth we saw last year is probably behind us. We don’t expect to see those kinds of things crop up again immediately. What’s also true is that all of these companies still are incredibly optimistic about where we’re going to end up. And this is again, when we talk about headwinds, I often find it useful to pay attention to what people do as well as what they say. So for instance, Google mentioned during their earnings call that omni and digital shoppers now make up … So omnichannel shoppers, people who shop online, but maybe pick up in store and digital shoppers now make up 50% of customers. And in Q1, a third of total digital sales were fulfilled by stores.

And that’s one of the reasons why Google said, "I expect us to scale up more through the course of 2022." This is Philipp Schindler, the company’s Chief Business Officer who said, "We’ve seen COVID accelerate the shift to e-commerce at an astounding rate, but keep also in mind, 80% of commerce still remains offline." So there’s a lot of room for digital to play a bigger role. And he said later on, "As we continue to think about our long runway for growth." So they’ve seen this immense growth year on year. They said yes, it has slowed down to "normal" levels. And yet there’s still a lot of room there to improve. What we saw with Shopify. They said, "In the space of just 16 months, our merchants cumulative GMV" that’s gross merchandise value, "has doubled."

Big Tech Players Continue to Invest in the Shift to Digital

And yet they continue to invest in longer term growth. Amazon. They said a lot of that again was getting two years of volume growth on top of a one year. "But we expect the longterm trends to be strong in this business and we are investing as such." These companies look at where we are and they don’t see it as a one time event that we need to back away from, or that we need to skip, or that we need to kind of write off as, "Well that was that. Oh, well."

They’re saying that was a one time event that set us up for future success as long as we are prepared to take control of it, take charge of it and invest and lean in. Again, Harley Finkelstein, who’s the President of Shopify who said, "My long list this morning of the many challenges faced by our merchants makes entrepreneurship sound hard. That’s because it is. It will always be hard. That’s the nature of entrepreneurship," which resonated for me.

Digital Makes Marketing Easier for Everyone… Which Makes it Harder for Everyone

It reminded me of a podcast episode we did a couple years back that talked about how digital makes it easier for everyone to compete, which makes it harder for everyone to compete.

You’re competing in a tougher landscape as more people come online, as more customers come online, and as more companies come online to chase those customers. And as the big players continue to invest because they see the future of this business, we recognize that that means it’s harder and harder and harder for you to compete. Which is not the same as saying it’s impossible. Far from it, which is not the same as saying, you can’t do it. Far from it. It says that this is where your opportunity is going to be over the next, 12 months, 18 months, 24 months, 36 months. So if you missed the window we had a year ago to get on board. That doesn’t mean that it’s too late. It simply means you’re going to need to work a little harder and work a little smarter to connect with customers where they are and where they are is digital.

Years of Digital Transformation in Months

The shift we saw in 2020 looked like it may have been a one time event. The new baseline is that we have reached the numbers we would have reached in 2022 or 2023 if the pandemic hadn’t occurred. I like to say we live in the future. This is surely a sign that that’s the case. And I didn’t mean it quite so literally there. It also means that the headwinds that the big players are facing, the challenges that people are facing are also probably one time events. And that the people who take advantage now will set themselves up for the greatest success in the long term. As Philipp Schindler at Google said, "We think about our long runway for growth."

It’s a Marathon, Not a Sprint

The reason this is hard is because it’s not a sprint, it’s a marathon. And the way that you can win that marathon is to recognize that that’s where we are now. Start putting one foot in front of the other, and begin running that race so your business can succeed in the long run.

In the meantime, we’ll keep churning out the content and support and tips and insights that can help you have the right roadmap to run. That includes things like our modern content marketing checklist, which you can find in the show notes for today’s episode at timpeter.com/podcast. Our download on a brief introduction to Thinks Out Loud, which will help you find the best of the 330 episodes that we’ve done to date. And our digital and e-commerce maturity matrix, which you can use assess where you are as a company and how you can go forward from there, how you can grow from there. And you can find all of those at timpeter.com/podcast.

Show Closing and Credits

Now looking at the clock on the wall, we are out of time for this week. I want to remind you that you can find the show notes for today’s episode, as well as an archive of all past episodes and the free downloads I mentioned by going to timpeter.com/podcast. Again, that’s timpeter.com/podcast. Just look for episode 330.

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Thinks Out Loud on Social Media

You can also find Thinks Out Loud on Facebook by going to facebook.com/timpeterassociates, by going to LinkedIn at linkedin.com/timpeterassociates. And you can find me on Twitter using the Twitter handle @TCPeter. Of course, as ever, you can email me at podcast@timpeter.com. Again, that’s podcast@timpeter.com.

Sponsor Message: SoloSegment

I’d also like to thank our sponsor. Thinks Out Loud is brought to you by SoloSegment. SoloSegment offers an amazing suite of search tools that provides search as a service for large enterprises. They focus on business results, not just search results, with easy automated tools that help your customers find the content that matters to them and helps you accomplish your business goals. They do all of this while protecting customer privacy to boot. You can learn more about SoloSegment and all the amazing work they do by going to solosegment.com. Again, that’s solosegment.com.

Show Outro

With that said, I want to say once again, how much I appreciate you tuning into the show. It means so much to me that you keep listening. There are so any great options out there for what you can do with your time and the fact that you choose to spend some of your valuable time with me every single week just means more to me than you can possibly know. I very, very, very much appreciate it. So with that, I hope you have a great rest of the week. I hope you have a wonderful weekend and I will look forward to speaking with you here on Thinks Out Loud next time. Until then, please be well, be safe, and as ever, take care everybody.

Tim Peter is the founder and president of Tim Peter & Associates. You can learn more about our company's strategy and digital marketing consulting services here or about Tim here.

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