Big Tech Results Show Digital Ad Crisis Continues

Wealth ManagementBig Tech Results Show Digital Ad Crisis Continues

Ad-dependent tech companies are struggling with shrinking client budgets and falling stock prices.

After a 2022 that saw ad-reliant companies suffer from shrinking client balance sheets and falling stock prices, this week’s fourth-quarter results from Alphabet, Meta and Snap show they still face risks.

Google’s parent company Alphabet reported a slight drop in quarterly ad revenue on Thursday, less than Wall Street had expected and surprising investors as the world’s largest digital advertising platform showed resilience compared to rivals. More smalls.

“For a company the size of Google and so influential, having disappointing results means the ad industry won’t recover in a quarter,” said Evelyn Mitchell, an analyst at Insider Intelligence.

Snap, which owns Snapchat, said Tuesday that it expects revenue for the current quarter to decline by as much as 10% due to competition and a weak economy.

“(Advertisers) are managing their spending very carefully so they can respond quickly to any changes in the environment,” Snap CEO Evan Spiegel said during an earnings call.

Meta, the second-largest digital advertising platform, pleased Wall Street on Wednesday with cost cuts and a share buyback program, even as it reported a third straight quarter of year-over-year revenue declines.

Meta said lower brand advertising spending in the financial services and technology sectors was one reason for the decline in revenue. Chief Financial Officer Susan Lee said the overall economy remains “extremely volatile” and it is too early to say how the year will turn out.

The mood among advertisers in general is one of “cautious optimism” for this year, Nikola Mendelssohn, vice president of Meta’s global business group, said in an interview Thursday.

By region, advertisers are optimistic about the US market, while confidence has taken a hit in Europe and China is showing signs of improvement, although the future remains uncertain as the country reopens from lockdown measures, he said.

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