It wasn’t long back when marketing and advertising firms were churning out insane profits with their audience targeting and advertising spends.
In fact, 2020 and 2021 were probably two of the most amazing years these ventures have ever had!
But then, what happened suddenly that giants like Snapchat & Twitter started sinking terribly in the pool of losses this year?
Snapchat’s second-quarter earnings report caused a deep tech plunge after two years of reporting the lowest sales. Investors feared that the company’s latest earnings report hinted that it had lost its hold on social media’s ability to monetize its platforms through advertising.
In the third quarter, the company did not provide financial guidance due to the economic situation, except that through this period, its revenue has been about flat as compared to the previous year. In the second quarter, it posted losses of $422 million, more than the $332.7 million average estimation.
At one point, in fact, Snap’s stock price plummeted as much as 36% to $10.51, dragging down shares of the social media firm with it. The stock’s value had decreased by 65% in the current year before this announcement.
Those highly dependent upon advertising took a similar hit!
Microsoft reported a net income loss of about $100 million during the second quarter due to the reduction in advertisement spending.
Digital advertising was clearly impacted by the macroeconomic environment during the June quarter.
Tim Cook
What’s the reason you think it could be?
After seeing a dip at the start of the pandemic, a lot of ventures began investing in online marketing to reach their targeted audience. At this time last year, Meta and Snapchat projected that revenue had doubled from the previous year, and Google’s grew exponentially by 62 percent.
But things changed dramatically this year!
Russia’s conflict with Ukraine led to some fear among advertisers, and several firms responded by banning Russian-based businesses from advertising on their platforms.
According to the tech industry’s titans, increased inflation, a downturn in the financial marketplace, and concerns about a recession have led businesses to spend less on their advertising budgets.
Several prominent businesses have also tracked a slowdown in hiring and investment. The number of layoffs and shutdowns is no secret to the industry either.
It is also said, one of the other reasons that the downturn also happened due to Apple’s recent tracking changes, which only began causing repercussions for tech and media companies in the second half of last year.
Apple introduced a feature that allows users to disable tracking by mobile applications, taking away a great deal of data used by social media companies to run advertisements. The change affected the businesses of giants like Meta, Twitter, and Snapchat and ventures like Pinterest and Tumblr.
Last year, Meta lost $10 billion because of changes to user privacy. Following that, Snapchat’s Chief Financial Officer, Derek Andersen, said that the changes “upended a decade of advertising industry standards.”
When will it stop?
The real question should be, will it really stop?
Given all the circumstances, changes happening within the industry, and the fact that online businesses are revolutionizing every day, it is clear that the ventures will keep seeing some fluctuations in the coming time.
However, it is estimated that the numbers will likely improve for giants like Meta and Twitter.
Is the marketing and advertising industry dying?
The marketing and advertising industry is too big to vanish, plus too important for any venture to ignore.
But as the marketing part is seeing a rise, the advertising part, however, is witnessing a slump.
With online panel studies becoming a major reason for growth, ventures are trying to shift their spend towards gaining data that could be real-time and authentic.
That being said, rerouting definitely doesn’t indicate vanishing. Let’s see what the numbers hold for the industry for the next quarter.
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