What is the digital world? It’s a place where you can buy anything, from food to cosmetics and electronics. The digital world has evolved from an online shopping experience into a global force that we interact with on every platform – computers, smartphones, tablets and more.
The “digital world” is a term that is used to describe the digital age. The “digital world” includes everything from computers, to phones, to social media.
The explosive advertising growth seen by some of the world’s greatest technology businesses during the epidemic is slowing.
The Covid-led spike in digital advertising has started to wane, according to a wave of tech results released last week. Inflation worries, supply-chain bottlenecks, the crisis in Ukraine, a gradual return to normality two years after the epidemic, the steady popularity of TikTok, and Apple Inc.’s AAPL -5.57 percent recent privacy reforms all contributed to the slowdown.
“We haven’t seen a similar collection of headwinds for advertising since the early 1980s,” said Michael Nathanson, a MoffettNathanson analyst.
Google parent Alphabet Inc., GOOG -4.76 percent, is the leading digital-advertising player in the United States. Last week, Facebook parent Meta Platforms Inc. FB -6.77 percent and Amazon.com Inc. AMZN -7.56 percent reported that ad revenue increased by 22 percent, 6.1 percent, and 23 percent, respectively, in the first three months of 2022, compared to the same period the previous year, down sharply from the 50 percent-plus increases they experienced at one point last year. Since coming public in 2012, Facebook’s total revenue growth has been the weakest it has ever been.
In an interview last week, Mark Read, the chief executive of WPP PLC, the world’s biggest ad-holding business, said, “Digital is hanging on to its gains, but it is not rising as rapidly as it did during the epidemic.”
During the epidemic, the Big Three’s quick development reinforced their domination of the advertising sector. Google, Facebook, and Amazon AMZN -7.56 percent gathered the majority of all ad expenditure in the United States for the first time in 2020.
Google, Meta, and Amazon representatives declined to comment.
Consumers spent more time on computer screens and conducted more online shopping in the early days of the pandemic, but as Covid-19 worries fade, their activities are reverting to more usual patterns.
“The acceleration of e-commerce led to outsized revenue growth after the start of Covid, but we’re now seeing that trend back off,” Meta CEO Mark Zuckerberg said last week during a call with analysts to discuss first-quarter results.
According to WPP subsidiary GroupM, one of the world’s major ad buyers, global digital ad spending is predicted to expand by 13% this year, excluding political ad expenses, a notable deceleration from the 30% increase seen last year. According to GroupM, digital advertising is predicted to account for 67 percent of total worldwide ad expenditure this year, expanding at a considerably quicker rate than advertising on traditional media such as TV and newspapers.
“It’s incredibly hard to expand after you’re two-thirds of the industry,” said Brian Wieser, GroupM’s worldwide head of business intelligence.
The situation in Ukraine was acknowledged by both Meta and Alphabet as a factor in the revenue decline. During Alphabet’s earnings call last week, Ruth Porat, the company’s chief financial officer, said the fight had “an outsized effect on YouTube advertisements compared to the rest of Google.” According to the firm, brand marketers in Europe are cutting down on their expenditure. According to Meta, the war decreased ad demand both inside and outside of Europe.
Meta reported a significant decrease in recruiting on Wednesday.
The slower growth comes at a particularly sensitive time for the digital advertising industry, which is still dealing with the aftermath from Apple’s mobile ad-tracking measures, which make it more difficult for marketers to target customers and analyze the effectiveness of their commercials.
The shift has hampered the digital advertising model and continues to be a source of frustration for many small and e-commerce businesses, prompting them to spread their expenditure among a wider range of players. Meta said last quarter that the modifications will cost the business $10 billion by 2022.
This year, TikTok, the app most known for brief viral videos, is anticipated to treble its worldwide ad income.
PHOTO: REUTERS/MIKE BLAKE
TikTok, the enormously popular app best known for short viral videos and owned by Chinese startup ByteDance Ltd, is also posing a threat to digital advertising players.
According to Insider Intelligence, TikTok’s worldwide ad revenues are anticipated to treble this year to $11.6 billion, helping it eclipse the combined sales of competitors Twitter Inc. and Snap Inc. Twitter and Snapchat are expected to produce $5.58 billion and $4.86 billion in ad income this year, according to the research company.
Google and Meta are both working hard to improve their TikTok-like services. During their first-quarter discussions with investors, both businesses touted their budding short-video offerings, Shorts and Reels.
According to ad buyers, Twitter’s $4.5 billion ad revenue might be susceptible in the aftermath of Elon Musk’s potential $44 billion buyout of the San Francisco-based firm. Some advertisers may abandon Twitter if Mr. Musk’s efforts to make the network more accessible result in an increase in disinformation and other problematic material, according to ad buyers.
According to an email obtained by The Wall Street Journal, Twitter has contacted several advertisers to reassure them that the firm is devoted to brand protection. The Financial Times has previously reported on the email.
A Twitter spokesman declined to speak more.
Suzanne Vranica can be reached at [email protected]
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