3 Online Advertising Stocks to Buy Now

Advertising and marketing have gone through a massive transformation over the last few decades thanks to the rise of the internet and cutting-edge technological advances. The days when businesses could solely rely on traditional advertising methods like direct mail, billboards, flyers, and radio & TV commercials to drive sales higher are long gone. Now, it’s all about reaching potential customers online and using data to specifically target an audience. Advertising has moved into the digital age, and there are plenty of companies that are currently at the forefront of this trend.

Many investors were rightfully concerned about how companies that rely heavily on online advertising would be able to navigate the pandemic, given that many businesses were forced to cut their ad spend to deal with financial constraints. However, we’ve seen ad spending pick up in a big way so far in 2021 and investors should be quite confident in the long-term growth story surrounding the top names in the industry. If you are interested in some of the best online advertising stocks to buy now, here are 3 great options to consider.

Alphabet (NASDAQ:GOOGL)

Alphabet’s recovery from last year’s slump in advertising revenue has been nothing short of extraordinary, and it’s certainly one of the strongest names in online advertising to consider adding to your long-term investing plans. The company is the world’s leading internet search provider, the largest generator of internet advertising revenue, and arguably one of the best technology stocks, period. Alphabet’s advertising program, called AdWords, helps companies to present their ads when people are searching for specific information on Google.

There are tons of benefits associated with this revolutionary program, including more brand awareness thanks to Google’s massive reach, faster results than with Search Engine Optimization, more conversions, and the ability to advertise directly to people that are looking for something specific. Alphabet just delivered a blowout Q1 earnings report that included $55 billion in revenue, up 34% year-over-year and diluted EPS of $26.29, up 166% year-over-year. Advertising spend is coming back with a bang, as the company reported $44.6 billion in Q1 advertising revenue, up 32.3% from a year ago. These are staggering numbers for a mega-cap tech company like Alphabet, and the fact that the company’s cloud business is also growing at a strong pace makes this stock a fantastic option for long-term investors.

Facebook (NASDAQ:FB)

Next, we have Facebook, another mega-cap tech company that has played a big part in changing the way that companies reach potential customers. As the owner of some of the most widely-used social media platforms in the world including Facebook, Instagram, Facebook Messenger, and WhatsApp, it’s easy for companies to recognize the advertising potential here. Direct-response advertising, in particular, is a big revenue growth driver for the company. This involves getting sales prospects to click a “call to action” button by catering the ads to a targeted audience. These types of ads are used a lot in e-commerce and lean heavily on storytelling, video footage, and emotional responses to make a sale.

Just think about all of the data that Facebook has access to with its 1.6 billion daily active users. Advertisers can cater their online advertising based on age, location, gender, consumer preferences, and more thanks to the way Facebook is designed. The company had a huge Q1 2021 and reported $25.4 billion in advertising revenue, up 46% year-over-year. Diluted EPS also increased by an incredible 93% year-over-year to $3.30. Investors should anticipate continued growth from the company as more and more businesses move away from traditional media and onto the internet and social platforms for their advertising needs.

The Trade Desk (NASDAQ:TTD)

The Trade Desk was a growth investor favorite last year and rallied over 194%, but has since cooled off. It’s a solid “buy the dip” candidate for more risk-averse investors that are interested in online advertising stocks, especially since the stock recently reclaimed the 50-day moving average. The Trade Desk is an intriguing company that provides a self-service platform allowing clients to purchase and manage digital advertising campaigns. These campaigns can be for a variety of different formats, including mobile devices, computers, connected television, and more.

This company is the biggest demand-side platform, which means that buyers of digital advertising inventory can manage multiple ad exchange and data exchange accounts through one interface. It's also worth mentioning that The Trade Desk is experiencing consistent earnings growth and reported revenue of $836 million in 2020, up 26% year-over-year. Keep an eye out for how the market reacts to the company’s upcoming Q1 earnings, which will be reported on Monday, May 10th before the bell.