Growing Ecommerce – The Retail Growth Podcast
Feed your growth mindset. Ecommerce is growing, and so are the challenges and opportunities for online retailers. In the Growing Ecommerce podcast, Mike Ryan and other smec experts are joined by industry leaders in ecommerce, digital marketing, and data science. By sharing business trends, practical solutions, and best practices, this podcast helps online retailers solve the challenges of tomorrow.
Growing Ecommerce – The Retail Growth Podcast
Meta's Ad Costs Are Rising: What It Means for Your Budget
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Meta, Google, and Amazon just posted Q2 2026 earnings — and the numbers reveal exactly where ad costs are headed next for advertisers. Plus: Shein's IPO filing shows what happens when ad dependency meets a broken profit model.
Chris and Mike break down all four Q2 earnings calls that matter for anyone running paid search or social budgets right now. Meta's ad revenue jumped roughly 27% year-over-year, but almost none of that growth is coming from new users — it's coming from higher ad load and rising frequency on existing accounts, which is why per-unit ad costs are climbing even as impressions go up. CapEx grew 55% year-over-year and net income actually dropped 14%, which is part of why the stock got punished despite the growth headline.
Google/Alphabet told a different story: search ad revenue is up 17% to over $60 billion, even as growth decelerated for the first time in years — still one of the strongest showings of any company this size. Cloud revenue is up 80%, and Google tied its ad growth directly to AI Max, which the company says is monetizing "billions" of net-new search terms that weren't served by ad inventory before. Chris and Mike table the "how does AI Max actually work" deep-dive for next week's episode — subscribe so you don't miss it.
Amazon's ad business grew 26% to roughly $19.8 billion, led by sponsored products, with no signs of slowing. And Shein's newly filed IPO prospectus reveals a business that's almost entirely dependent on paid advertising — 95% of its 2025 marketing budget (around $6 billion) went to ads, growth has stalled since the U.S. de minimis exemption ended, and the company isn't hitting the "Rule of 40/50" profitability-plus-growth benchmark institutional investors look for.
This is a market-earnings recap for PPC managers, in-house ecommerce marketers, and agencies who need to know what's actually driving ad costs and platform strategy this quarter — not just headline numbers.
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Intro — Google, Meta, Amazon earnings & Shein's IPO preview
SPEAKER_01Welcome to another episode of Growing E-Commerce. Today we're going to look at markets. We'll be talking about earnings from Google, Amazon, and Meta, of course, the ads and commerce business. And we'll be talking about Sheehan's IPO,
Meta Q2 earnings: ad revenue soars, but the stock gets punished
SPEAKER_01what we know about it so far. Do they still earn money, Sheehan? Did they ever? Let's get into it. Hello, Mike, by the way. My name is Chris.
SPEAKER_00Yes. Mike, you're Chris. Good. Yeah. Well, I'm Chris, you're Mike. Let's roll. All right. Good. We're not mixed up. I'm tired today, Mike. Yeah. I think I need a rapport.
SPEAKER_01Let's not go down this road again. We know who we are, but does Meta know who they are? Do they know what their strategy is? Yes. Should I start with Meta?
SPEAKER_00Yes, start with Meta.
SPEAKER_01Let's start with Meta.
SPEAKER_00You're not happy with the earnings call? No. No one is.
SPEAKER_01Who is or who is happy? No, I don't. Okay. I don't. Um no, I I'm not gonna I'm not I don't have like a I'm not shorting anyone or I have no no interest in this. Um so But the earnings call was not not positive. No. Tell me why, from your perspective. Uh from my perspective, um, I mean, their revenue was up. It was up a lot. Their ad revenue, which is basically all of their revenue, right?
SPEAKER_00It's uh I mean we can do the math here. I think it's uh 99% or something like that.
SPEAKER_01It's 59.4 billion out of six divided by 60.8, which I think is like 96. Yeah, 97%.
SPEAKER_00Something like that. So they are, I would, I would say they are somehow dependent on their ads basically we've talked about in the past Mark's disrespect for advertising. I I I don't want to talk with the ads guys, they're they're just unimportant. So they are important, and the core business, I think this is the definition of core business, right? 97, 98% um of your world revenue. Uh again, uh 20 almost 30% year-over-year jump. Yes. It's it's I mean, let's face it, this is absolutely amazing. Amazing, especially if you care uh compare the growth rates uh to Google's ads business. They are eating the lunch of the big Chief, especially in the fields of Google Ads, uh Google Ads ads in general.
SPEAKER_01Yeah, digital marketing. We talked about that earlier this year. Meta's on track to overtake Google in terms of and Google is soldy about it.
SPEAKER_00Uh and I I think they will do something about it. But okay, so that the growth rates are absolutely outrageously good, but the stock still got punished. Yeah.
SPEAKER_01How come? Well, I think that's why I said does Meta know who they are? You know, this goes back to when they renamed themselves Meta because they were gonna be a metaverse company. It's like when you tattoo something on and then like it's it's so embarrassing. Like your company's called Meta now, and it's not because you were drunk in like on vacation.
SPEAKER_00They did it on purpose. And I think that tattoo was right on the forehead.
SPEAKER_01Yeah, Mike Tyson style face type face tattoo. But now they're not a metaverse company anymore. Now they're an AI company, right?
SPEAKER_00Yeah, yeah, of course. I think they're an ads business. Yeah, I mean, you you you can't argue against it. Uh uh a super successful uh ads business. Yeah. By the way, shout out to I mean, I think we also talked about this. Um, and we we see it on on an everyday basis. Meta has really become the little, maybe even equally old brother to Google. Whenever someone is is is looking at a digital ads budget, yeah, meta is right up there as a channel to to look at. And they they made this transition extremely well. I can remember when when that when when they had this first earnings call, man, yeah, years ago, where they were the I think the first time in the history they flatlined with uh uh new users. Um man, they got punished as fuck. Yes, but they turned around by becoming this ads machine. And shout out to the big suck, man. This transformation, whether they did it on purpose or not, whether they gaslighted everyone else with the meta thing, the ads business is doing extremely well. Yeah, it is what it is.
SPEAKER_01Yeah, it's just they're they're spending way too much of their money. I mean, honestly, they can still afford to do that more or less indefinitely, to be perfectly honest. But the question is, where is that headed? That's somewhere I really respect Apple for kind of stepping away from that stuff.
SPEAKER_00But but I mean let's let's face it, Mike, we we had this discussion, right? I mean, when when we talk about a bubble, uh the the question is I think that the bubble your argument that we are in the midst of a bubble, I think the the the strongest indication, or maybe an fact, is that the capex abit ratio has never been worse. Right? So it it's actually crazy. Abbots are declining because capex is is increasing way faster than the companies can grow, of course. Yeah. I mean, talking about meta, their their their capex grew 55% year by year. 55%. Yeah, and they were already spending billions of dollars lost. So just it's not like it was a small base or something. Yeah. So the I think fair play, this this is something I think institutional investors get get nervous about. What is the monetization strategy? Yeah. When I'm looking at Meta, I like you said, they can do this for for years, right? I mean, still the question, what where where is the return on invest on this on this AI um capex? And I think I think Google, on the other hand, they also got punished because the capex are completely skyrocketing. But I I I see a way way more straightforward monetization strategy with regards to AI on Google's side than meta.
SPEAKER_01For sure.
SPEAKER_00So maybe we we we can touch base on that because all the AI-based campaign types, they are creating revenue for them already. Yeah, yeah. Quite convincingly. So yeah.
SPEAKER_01Yeah, I mean, before we move on from meta, I want to discuss one one bare thesis that you and I were talking about um before recording. Like, you know, the question is where does that 27% come from? Yes. And it's not really from new users. Um very good point. That's bad. That's bad. Because where it is coming from, impressions are up. And if users are not up, but impressions are up. Um You know what that means for the for the for the meta user, the average one. Yeah, the ad load is increasing, the frequency is increasing increasing, which is not necessarily a positive thing.
SPEAKER_00Not necessarily, I think especially for meta, because meta I think is still seen as my social media platform. I'm I I think I'm not deliberately jumping on meta um to to look for a product. That's that's what I do with Google. Yeah. Right? So if if if the the original reason why I'm using meta is eroding because uh it it it is becoming an ad platform, I think there is a risk that um yeah, user users will jump ship. And the question is, okay, where's the growth coming from? Because there's a limit of increasing your share of wallet with with your given average meta user before they're like, guys, hold on. It's too much.
SPEAKER_01It's too much. Yeah. And uh here, you know, personalization is key to helping fight that. Like I will say I haven't used Facebook in many years, but Instagram, I find that uh even though I'm not there to look for products, me personally, um they're they know my interests really well. Better than anyone else. Yeah, the targeting is usually pretty good, except for when Timu is just spamming things. But that's old news. Timu breaks everything. Yes, but Timu's not doing that anymore.
SPEAKER_00So um by the way, one last thing, uh, just for for for for the uh for the listeners. I mean, by the way, the the question is what are you taking away as a as an as an on the marketer? Yeah, because meta is not going bankrupt anytime soon. It's just uh maybe the the biggest takeaway is yes, the growth is coming from increasing basically the share of wallet with any with every average meta user, which might lead to some friction on the on the on the consumer side. Yeah. Capex, by the way, compared to growth, led to a net income drop by 14%. Yikes. They still had net incomes of almost 16 billion, 16 billion. So but still, yeah, you you see this trend line.
SPEAKER_01For sure. And and you know, the impressions are up and also the ad unit costs are up as well. Yeah. So this is By the way, this this is a takeaway. Yeah. That's you know, it's getting more expensive. More expensive, even though impressions are up. I think, yeah, that we can get into the reasons why, but let's move on. But I think on the user side, that's not great if impressions get if the ad load is too high, and on the advertiser side, if it starts getting expensive, it needs to work out for sure.
SPEAKER_00What we could maybe can can have a look at um maybe one of one of the next episodes. Um I would really be interested because I think there's a good segue to Google because there we see what drives the ad revenue. Yeah, it's new powerful campaign types. What I will be interested in, what is the campaign type strategy on Meta side, right? We talked about the stalling
Google/Alphabet: search ad growth, the AI Max teaser & the $200B CapEx bet
SPEAKER_00of um Advantage Plus. Yeah. Where's where's this new new campaign type which drives growth? Yeah.
SPEAKER_01Uh maybe we can have a look at it. Definitely. They have um a model or like their own, yeah. They have their own AI for targeting, which I can't, I'm blanking on what it's called right now, but um we can talk about that. That's where some of the gains have come from.
SPEAKER_00But but um I think a great segue to our beloved company, the big G. Yes. What I mean, uh let's state the obvious cloud is on fire. Yes. It is what it is, and that will continue. Cloud revenue accelerated by an insane 80% of a year. Um, I think they are doing they're doing fine with with cloud.
SPEAKER_01Yeah, and that that's a path, by the way, exactly for them to monetize their AI. It doesn't all have to get monetized through ads, but their search ad revenue is also up 17% to over 60 billion. So solid. Yeah. Solid. Exactly.
SPEAKER_00But but it's decelerated for the first time. That's true. And and how many quarters? Two, two, three quarters, uh, two to three years, uh six or eight quarters, yeah. So for a long time. Uh it's the the slowest growth. Still 14%. Yeah.
SPEAKER_01I mean, there was a there was an analyst on the call, and I wanna I'm we're gonna table this for next episode, but um, there was an analyst who was like, 17%, considering how big Google is, like, honestly, how is that possible anymore?
SPEAKER_00Yeah, but the the yeah, it's a fair question. The answer is what I liked about it, because they tied the still unfathomably strong growth rates for a company the size of Google. They tied it to one of them, the major streams Capac is going into. They're new AI-based campaign types. Yes. First and foremost, AI Max. Yeah, which is still what what was the code?
SPEAKER_01I think tens of billions of new search uh terms are it was billions, billions, billions of net new searches that weren't really monetized. No one does before it.
SPEAKER_00Yeah. What does that mean, by the way, Mike? AI Max. When we talk about AI Max, yeah, what what does it mean AI Max is monetizing search terms other campaign types weren't before? What does that mean, actually? On an operational level. How how how does AI Max do it?
SPEAKER_01Yeah. It's a super interesting question, and actually I want to table it because we we only have so much time on this episode, we'll talk about it next week. Cliffhanger, maybe.
SPEAKER_00Yeah, cliffhanger. But positive takeaway, one of the major new campaign types is driving growth for them.
SPEAKER_01Yes, and call to action if you haven't subscribed. Subscribe so you can listen to the answer next week. We're gonna come back to it. All right. Um, but it's a big topic, so let's let's hold on to it. Okay.
SPEAKER_00Anything else noteworthy about the earnings uh of Google?
SPEAKER_01Yeah, I mean YouTube ads, strong, 13%. It's 11 billion alone. Crazy shit. Um and the basically the Google network, like AdSense, AdMob, AdX, all this programmatic open web stuff, the display partners and so on as well. This is uh this is shrinking. Yeah. And maybe on purpose. Probably. They just don't care. Yeah, that's a long-term trend. Yes. So you know, considering it's down, I think, to about 1% year over year, but it it hasn't been growing much. And as a share of the ads business, it's on a long-term downward trend.
SPEAKER_00And that true through that. Um again, by the way, uh underlying, I think uh Google has has for me by the way, CapEx crazy as well. I think they they they um hold held on uh to the projection of roughly 200 billion capex uh for the fiscal year. 200 fucking billion. Insane. It's completely insane. By the way, the stock I think also got punished because of that. It's it's the fear. However, I see with Google, I I I have a better understanding where the capex is going to. Yeah, it's it's the chemini, it's it's it's and chemini is everywhere.
SPEAKER_01Yeah, they they had their identity crisis with BARD. Yeah, we talked about that. Yeah, but that's it. This is now think about it. This is a year in to AI overviews, AI mode, and they're still up 17%. So again, that thesis you can forget about it. Like they have an identity, they have a path to monetizing this stuff. Um we'll see how all the AI economics work out long term, but out of you know, compared to meta, that's why like meta has an identity crisis in my opinion. And massive catbacks.
SPEAKER_00Yeah. So um again, I I'm I have been bullish on Alphabet now for quite some time. I was the one, I think one of our first podcast episodes where we said, okay, let's see where Google is going because there was no clear path. Now they have the path and they are executing the shit out of it. Yes. By the way, for me, still, I think it was the the last earnings call. This again, I think Sunda literally said again, Gemini is everywhere. I I I don't know, top of my mind. I think he said some somewhat about 20 billion API tokens are processed per minute. Or something like so and and uh I like okay, they're spending 20 200 billion in CapEx, but it's going into the core of their business. Yeah, which it's fine.
SPEAKER_01Yes, and the but the crazy thing too is Chris, like they said in the earnings call that like this kind of commodity AI, um, like like the AI that's constantly serving in AI overviews and stuff, you might think that that's so expensive. But that's not even that they said that with their TPUs and stuff, they're serving this at virtually no cost. By the way, that move. Yeah.
SPEAKER_00So it it's being able to create your own chip power, basically.
SPEAKER_01Um I don't want to get too off topic because I could go to the right. What degree integration at its finest? Yes. Yes. And I I'm not optimistic towards anyone who's not Google in this regard, because TPUs are just so good. But to sum up Google, search revenues up, overall revenues up. Uh they're not sending that much paid traffic to the open web. They're not sending that much any traffic to the open web. Or in the you know, there are these organic problems with with it. But they're just focused on their owned and operated properties and maximizing that.
SPEAKER_00And that's why I'm although the camp capex are crazy, I'm super bullish on on this on this company. But but leave leave alone the stock price, because I mean this is Fugazi Fugazi. You actually don't know because I think they they had a massive beat, uh, top and bottom line, um, compared to what the street expected, and the stocks got still dumped. Forget that. I think they are investing in their corpuses, and the corpuses is a is a massive flywheel. That's what I what I see. And that's why I would be way more favorable of uh Google compared to Mela.
SPEAKER_02Yeah.
SPEAKER_00Amen. I am I agree. Uh a word with A is maybe another man.
SPEAKER_01You're you know, I thought I was good with the second. Yeah, man. That's some smart I'm learning, I'm learning from the best. All right. Um Amazon also up a whopping 26%, reaching 19.8. Let's just call it 20 billion in advertising. Yeah, I love all the all the billions flying around. We're gonna talk about billions going in the other way soon though, it's with with Sheehan. So
Amazon ads hit $19.8B — up 26% and still climbing
SPEAKER_01hold on, hold on to your butts. You know what? Amazon. I think they did well. They they they are not going to go bankrupt. No, they're fine. Sponsored products are the largest ad offering, doing really good here.
SPEAKER_00This by the way, this is what I love about what I love most about their their earnings call. Um the ads business. It's going strong.
SPEAKER_01Yeah. Absolutely. Ads business is strong. I mean, they have there's they've they're strong just about everywhere.
SPEAKER_00But um the of course, uh, yeah, Amazon. I think we we can leave it right there. They're not going bankrupt.
SPEAKER_01No. Should we say about Sheen?
SPEAKER_00Okay, all right. In the interest of time, shouldn't be a segue, by the way. Going bankrupt, Sheen.
SPEAKER_01I'm not I'm not I'm not saying that. Bankrupt, Sheen. No, that no. But Sheehan released their uh prospectus for their IPO. They released a bunch of documents um as an inch
Shein's IPO filing: the ad-dependency crisis behind the numbers
SPEAKER_01closer to an IPO question is should it happen from my perspective. But what's your reaction?
SPEAKER_00Look, um we we I think we had our fair share in in uh in in the media landscape talking about Sheen, uh talking about yeah, how how their the business ads business is doing in general. What I see with Sheen is uh is uh I don't know if if if I would would call it death spiral, but if you if you if you look into into the whole idea of of this stock company, it was all about growth. Yeah as far as like again, there are maybe other investors, institutional investors which see it as a completely different company. For me, it was this massive growth story, uh a strong enough business model to have a sustainable, strong growth rate. And yeah, everything it feels like everything crumbled with with this, no, really, with this seemable, I don't know, not even that big of a thing, but the The Minimus Act. I mean, I think it it crumbled their business model and uh they are now in a very, very tough uh space because they can't grow anymore at rates which which is sustainable. Yeah, and that I don't know, minutes before going public, it's really a bad bad place to be in. Yeah.
SPEAKER_01100%. And I mean, I've been criticizing that dependence on De Minimus for a long time. And you know, I'm a little resentful because there are people who are always like, don't you think they know that? Like they know that, and they're building, they're they're they're transitioning, they're doing more local, they're bringing in local sellers, they're doing all kinds of stuff. And and yeah, they did make investments there, but um actually, no, they were still completely 100% basically dependent on the poll.
SPEAKER_00For for sure, it at least it seems like like that, because I mean and you never know what's what's going on behind the curtain, right? I I think what what Sheen, as big as they are and as big as China is, what what I think what they underestimated is um and shout out to the EU, uh, how how serious they were uh about this, yeah, and how forcefully they really acted on it. I think it's a good move. We talked about how how openly we invited these Chinese Chians to eat our lunch. I think it's the right move. Yes, I think it's good on all levels. And by the way, I I posted on LinkedIn, I think you too. Of course, Sheen will find a way. Yeah, I don't think that the company's been around for a long time. Of course, and and they they have smart people there. The question is, do they find a way to to accelerate their growth again? Yeah at certain profitability levels, because this was yeah and if you if you if you if you're crawling around at an ABIT margin of what is one 1% and you're compared to big other, you know, indie tax group and so forth, which are crossing 20% abid margin and still growing. Yes. I don't know. Why should I invest in you?
SPEAKER_01No, they're yeah, if there's like the growth story at this point, they are not precluded from the US market or the EU, but they're severely limited in these markets compared to the past. The growth story has just evaporated, they're not profitable. So, which is it? If they're not growing and they're not profitable, what are you supposed to like about it?
SPEAKER_00And I I I just uh over the weekend uh I met a good friend working for for quite some some successful company, uh Nasdaq listed, um, and they are operating on a rule of 50. And This is basically the this every investor knows if I invest in this company, there's a rule of 50, which is the combination of growth, Kager, uh compound and compound annual growth rate and abit margin adds up to 50. So if I'm not growing, I'm better, highly profitable. If I'm super strongly growing with no uh Abit margin, fair enough. Yeah. But it and this is where I I see the the crisis with with with with Sheen right now. Yeah. Um tough space to be in.
SPEAKER_01For sure. Um it also it revealed their their total dependence on advertising as well, you know, just spending uh last year uh six billion in total marketing costs in 2025, which is a lot. And yeah. And the the company uh you know, of their total marketing, it would they were like 95% of it was ad spend. And that shifted a bit recently.
SPEAKER_00But the And it seems like, right, when whenever they they they they loosen or yeah, decrease the pr the ads pressure, there's no way they can can compensate with with organic traffic, right?
SPEAKER_01No, and this was like I think that they have a clear or had a clear value proposition. Um the amount of selection was mind-boggling, the prices were rock bottom, but it wasn't enough. It still wasn't enough. They needed the ads at a massive scale to do what they were doing.
SPEAKER_00And and that's that that's the thing which surprises me because honestly, I've never bought there, I will never buy there for reasons um no one is interested in. But whoever bought there had quite a good experience. Yeah, so I'm wondering like this this ads pressure that there is there's no no that this return rate of customers, because I think the core product is not bad. You you can talk about you know there I think that they're they're cleaner businesses, but that the core product, like you said, is code.
SPEAKER_01Yeah, compared to uh Timu, for example, I I can the the user experience and everything of Shein makes a lot more sense to me. Absolutely. You can imagine recommending Shein to a friend. You can imagine kind of viral word of mouth coefficient or whatever, but um not enough. And customer acquisition costs basically tripled, at least if you look at the top line level uh numbers. Crazy. Yeah.
SPEAKER_00Let's see. Quite interesting. Any any news on the IPO now? Um I think it got got delayed now, right?
SPEAKER_01Or um I'd have to double check.
SPEAKER_00Yeah, I think so. But let's let's see. I'm really curious about that.
SPEAKER_01But I think that wraps us up for Q2 earnings, right? Earnings calls are always fun.
SPEAKER_00Yes. I like them. A lot of billions to discuss about. But as as as long as long as Google and Meta are growing
Wrap-up: what it means for advertisers heading into Q3
SPEAKER_00double digits, I think the world is fine. I think we should get worried when they are growing only 9%. Yeah. Shit is about to hit the fan. Yeah.
SPEAKER_01Should shouldn't we be concerned that um that the modern economy depends on the ad revenue of giant tech platforms, maybe? I don't know. Should should should be up for discussion. Thank you, sir. Thank you, Chris. Thanks everyone for listening. This has been another episode of Growing E commerce, brought to you as always by Smarter Ecommerce. You can learn more at smarter ecommerce.com. And once again, if you leave us a review, a comment, shout out on LinkedIn, whatever, we really appreciate it. Thanks, and we'll see you next time.