• Not only did Google’s topline revenue ($54.5 billion) miss analyst forecasts, YouTube’s ad revenue ($7.1 billion) contracted for the first time since the online behemoth started reporting those earnings in Q4 2019. Even Google’s search ad business, historically recession-proof, sputtered in the quarter with $39.5 billion. When Google sneezes the rest of the industry tends to catch a cold.
• Whatever Google has, Meta got a bigger dose. Revenue for the quarter was down on both the same period last year (4.5%) and the previous quarter (3.8%). Net income is waning; down 52.2% year-on-year, and 34.3% on the previous quarter. Bottom line: At this quarterly pace, Meta will be loss making next year.
• Despite Snap’s attempts to innovate its way out of trouble (Snapchat+ anyone?), the mobile messaging app’s latest set of results show it has a long way to go. Revenue in its third quarter rose 6% compared to the same period a year ago to $1.13 billion. That’s the slowest rate of growth since the company went public back in 2017.
• Bottom of the funnel is now the top of the pile. Amazon raked in $9.5 billion in ad revenue over the quarter, up 25% on the same period a year ago.

Let’s be clear, these platforms are still making loads of cash. They’re just not making it as quickly as they once did. Slowdowns like this are inevitable — and not just because there was only going to be some sort of reversion in ad spending after a white hot 2021. This slowdown is more structural.

Ad dollars from the lucrative SME sector? Shrinking. Blame a lot of things, from rising ad prices, worsening ad measurement, ballooning logistical costs, newly-sober public markets, and a more muted than expected demand.

What about e-commerce? There’s a contraction in online sales (in the near term), which means fewer opportunities for ads.

OK, but the platforms are still the places to go to sweat advertising hardest, right? Probably, but it’s getting harder to know for sure. Remember, ad prices have gone up as measurement has faded.

Which brings us to the elephant in the room: Apple. The company continues to starve some of the biggest platforms of revenue after making it more difficult for them to offer effective targeting and measurement to advertisers.

There’s less oxygen for online advertising to grow in the way it has become accustomed to.

Never mind the complex web of economical, epidemiological and policy factors constricting the flow of money even further.

Wherever this volatile period nets out, it’s likely to go through some sort of correction to get there. Investors (i.e marketers) are already getting a sense of what their risk tolerance is.

“This …read more

Source:: Digiday

Author: Aaron