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Portfolio Manager Insights
Unlocking the next era of efficiency in digital advertising
Fidelity’s Becky Baker explains why she favors companies building stronger digital advertising capabilities to accelerate revenue growth.
Key Takeaways
- Internet platforms and TV content providers that have enhanced their digital advertising solutions have, of late, achieved higher revenue and boosted their appeal as investments, says Fidelity Portfolio Manager Becky Baker.
- “I am keeping an eye on companies in the early days of building a more compelling advertising offering, believing it can be a big win for all parties involved – the company, the advertiser and consumers,” says Baker, who co-manages Fidelity Advisor® Growth Opportunities Fund with Kyle Weaver.
- In actively managing the diversified domestic equity strategy, Baker and Weaver assess a wide spectrum of companies with varying growth profiles. Their investment approach is anchored by the philosophy that the market can often miss nuances of a company’s business, which they believe can have profound implications for the long-term value of the enterprise.
- Baker says recent progress in digital advertising fits squarely into the co-managers’ investment approach, which emphasizes companies they think are intrinsically undervalued based on their three- to seven-year view of earnings.
- “It’s a potential big win for the platform company because it’s got space that it can sell to advertisers and that can potentially accelerate revenue growth,” she explains. “It’s also a great outcome for advertisers because increasing reach and the number of advertisers that come to a platform often results in a better match between consumers who are well-positioned to see an ad and the advertiser that has something to sell.”
- Baker notes the meaningful improvement in the matching between what a consumer may want to purchase and the technological enhancement that allows an advertiser to target the right consumer at the right time.
- “That matching, I think, can be immensely powerful as these internet platforms and TV providers achieve greater scale,” she notes. “We see this happening in a bunch of different use cases, and hopefully the consumer also is getting a better experience.”
- Baker believes Meta Platforms is well-positioned amid the evolving advertising landscape, adding that the parent of Facebook, Instagram and WhatsApp remained a top fund holding as of February 28, 2026.
- Meta is using artificial intelligence to determine the best time to show somebody an ad, enabling it to keep the number of ads everybody sees the same, on average, but also show an ad to a person when they’re more likely to click on it, according to Baker.
- “That’s a powerful example of using AI to be more discerning about showing the right ad to the right person at the right time – and what it can do to drive revenue for some of these advertising-based business models,” Baker contends.
- She also cites Netflix as another sizable fund holding she believes could benefit from improved digital advertising techniques. The provider of subscription-based video-streaming services recently rolled out new subscription tiers – lower-priced access with ads and higher-priced access without ads.
- Baker holds that this approach benefits both Netflix and consumers, noting that the company has generated almost enough advertising revenue from consumers who opt for the ad-supported tier as consumers who opted to pay full freight.
- “I think the ability to give consumers choice is a great unlock for Netflix, in terms of potentially signing up new members,” she says. “This accelerates not only the company’s organic growth, to the extent the advertising revenue can meaningfully contribute to the total top line, but also potentially opens up a whole set of subscribers who previously wouldn’t have considered the service because they weren’t willing to pay the full subscription price without ads.”
FEATURED FUND
Fidelity Advisor Growth Opportunities Fund (FAGCX)
Seeks to provide capital growth.
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