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Zynga’s Advertising Business Bounces Back

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Zynga reports record advertising sales

If there’s a segment of Zynga’s (ZNGA) business that clearly reflects the company’s turnaround, it’s the advertising business. After a long period of stagnant or declining sales, Zynga’s advertising business has made an impressive recovery.

According to Zynga, it achieved record advertising revenue and bookings in the fourth quarter. Its advertising revenue rose 21% YoY (year-over-year) to $72 million in the quarter, and it also reported record advertising revenue in the third quarter. Contributions from acquired businesses and advertising network optimizations are some of the catalysts that have supported the strong recovery in Zynga’s advertising unit.

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Zynga derives about one-third of its revenue from advertising

The advertising business contributed 28.5% of Zynga’s total revenue in the fourth quarter. Facebook (FB), Yelp (YELP), and Twitter (TWTR) derived 98%, 96%, and 87% of their revenues from advertising, respectively, in the quarter. Advertising contributed 83% of revenue at Alphabet (GOOGL) in the quarter.

The future is bright for Zynga’s US advertising business

The future looks bright for Zynga’s advertising business as the company brings more games to the market and as marketers shift their advertising dollars from traditional TV commercials to digital platforms. In the United States, Zynga’s largest market, spending on digital ads is set to increase 19% this year to $129.3 billion, according to eMarketer estimates.

Mobile, Zynga’s favorite platform, accounts for more than two-thirds of digital ad spending in the United States.

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