The slowdown in advertising spending has reached social media and technology firms


What do Google, Snapchat, TikTok and Facebook all have in common? Business models based on selling ads. Because of this, they share something else: a problem.

Lately, ad spending isn’t what it used to be. But the slowdown isn’t hitting all tech platforms equally.

“There are so many problems affecting ad-based companies right now,” said Jasmine Enberg, principal analyst at Insider Intelligence.

One big problem? Inflation.

Mark Mahaney, senior managing director at Evercore ISI, said: “Corporations, which spend money on marketing campaigns, are seeing inflation in their various businesses.” “So at the margin, that means they spend less money on marketing.”

So it’s no surprise that ad-based companies’ revenue has stagnated — but not equally. Alphabet’s revenue was better than expected, Twitter was disappointing and SNAPs were dismal.

“No ad revenue platform is guaranteed to fail, but not all ad platforms are created equal, and some will be recession-proof,” Mahaney said.

We hear and talk a lot about Snapchat and Twitter, but in terms of advertising revenue, they are tiny; Sometimes, they are considered test ads. Google and Meta are huge.

“We expect Snapchat and Twitter to account for less than 1% of global digital ad revenue each this year,” Insider Intelligence’s Enberg said. Compare that to Google, which is around 30%.

So, it’s the little ones that are getting worse here. But ad revenue is different from a slowdown.

“We don’t see store cuts across the industry as a whole,” said Kate Scott-Dawkins with media investment firm Group M.

Some companies may lose ground, others may gain: Tik Tok’s growth, for example, was explosive. But overall, Scott-Dawkins said ad revenue growth for the industry will be in the low double digits — not terrible, just not the 50 to 60 percent growth some companies saw last year.

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