Meta of course owns Facebook and Instagram, and the company is in unique circumstances as a lumbering ad giant that is competing with Chinese-owned TikTok in social media; battling with Apple over its new rules; and trying to change its business model to plan for a virtual reality-fueled metaverse in the next decade. Meta’s revenue saw its first revenue decline ever, with ad revenue of $28.15 billion in the second quarter, down from $28.58 billion in the second quarter of 2021.
Mike Proulx, research director at Forrester, said that Meta’s most immediate concern could be TikTok. “The market has spoken and advertisers are skittish amidst a cloud of economic uncertainty,” Proulx said in an email. “Let’s face it, ad spend is under scrutiny right now and that translates to marketing executives making tough decisions on where to spend their limited budgets. Facebook and Instagram were once the place for brands to be but that’s simply not a sure bet anymore, especially for brands looking to reach Gen Z.”
Read: Meta defends Reels, metaverse strategies
Twitter’s ad revenue was up 2% year over year, hitting $1.08 billion. Twitter’s quarterly statement touched on the topic most brands and ad platforms have addressed, the broader economy, but also noted Twitter’s unique circumstances. Twitter said results were “reflecting advertising industry headwinds associated with the macroenvironment as well as uncertainty related to the pending acquisition of Twitter by an affiliate of Elon Musk.”
Read: Twitter’s ad revenue barely grows
Similarweb, the data marketing and research company, tracks trends on websites, including portals to ad platforms that marketers use to engage with TikTok, Facebook and Twitter. “The big growth story in social media has been TikTok,” a Similarweb representative said in an email statement, “although even they are no longer seeing multi-hundred percent growth [year over year.]”
Similarweb said it detected less traffic to ads sites, “portals where advertisers buy and manage ads” for properties including Twitter and Snap. Internet traffic to Twitter’s ads portal was down 10.5% year over year in June, Similarweb found. David Carr, a senior insights manager at Similarweb, said the Twitter slowdown could be a mix of economic uncertainty and the hangover effects of Musk’s botched takeover attempt at the company.
“Demand growth on our advertising platform has slowed significantly,” Snap said in an investor letter after it announced results. Snap’s revenue was still up 13% year over year, reaching $1.1 billion, but the company acknowledged that it was not meeting its own ambitions.
Snap’s results and remarks highlighted the mood of advertisers, who can easily adjust spending on automated digital ad platforms, like Snap, as the economy shifts. “Advertisers have lowered their bids per action to reflect their current willingness to pay,” Snap said.
Read: Snap says demand for ads slowed
Google appeared to be in a better position than its smaller rivals after its earnings report showed search advertising holding up relatively well. The thesis has always been that in uncertain times, and with Apple’s privacy changes, marketers flee to what has worked in the past—Google.
“Despite [Google chief financial officer] Ruth Porat’s reference to ‘pullbacks in spend by some advertisers’ due to rising inflation, supply chain challenges, and slowing economic growth,” said Forrester senior analyst Nikhil Lai, “Alphabet’s search ad sales grew more than 13% in Q2 2022 to $40.7 billion , beating analysts’ expectations of $40.2 billion.”
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