Meta of course owns Facebook and Instagram, and the company finds itself in unique circumstances as an advertising giant competing with Chinese-owned TikTok on social media; fighting with Apple over its new rules; and trying to shift its business model to plan for a VR-powered metaverse over the next decade. Meta revenue saw its first-ever drop in revenue, with ad revenue of $28.15 billion in the second quarter, compared to $28.58 billion in the second quarter of 2021.
Mike Proulx, director of research at Forrester, said Meta’s most immediate concern may be TikTok. “The market has spoken and advertisers are nervous amid 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 marketers making tough decisions about where to spend their limited budgets. Facebook and Instagram were once the place to be for brands, but it’s just not a safe bet anymore, especially for brands looking to reach Gen Z.”
Read: Meta Defends Reels, Metaverse Strategies
Twitter’s ad revenue grew 2% year-over-year to $1.08 billion. Twitter’s quarterly statement touched on the topic that most brands and ad platforms have tackled, the broader economy, but also noted Twitter’s unique circumstances. Twitter said the results “reflected ad industry headwinds associated with the macro environment as well as uncertainty related to Twitter’s impending acquisition by an Elon Musk subsidiary.”
Read: Twitter’s ad revenue is barely growing
Similarweb, the data marketing and research company, tracks trends across websites, including portals to the advertising platforms marketers use to interact with TikTok, Facebook and Twitter. “The big story of social media growth has been TikTok,” a Similarweb representative said in an emailed statement, “although they are no longer seeing multi-hundred percent growth.” [year over year.]”
Similarweb said it detected less traffic to ad sites, “portals where advertisers buy and manage ads” for properties such as Twitter and Snap. Internet traffic to Twitter’s advertising portal was down 10.5% year-over-year in June, Similarweb found. David Carr, chief information officer at Similarweb, said Twitter’s slowdown could be a mix of economic uncertainty and the hangover effects of Musk’s botched takeover attempt on the company.
“Demand growth on our advertising platform has slowed significantly,” Snap said in a letter to investors after the earnings announcement. Snap’s revenue was still up 13% year-over-year to $1.1 billion, but the company admitted it was falling short of 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 changes. “Advertisers have reduced their bids per action to reflect their current willingness to pay,” Snap said.
Read: Snap says ad demand has slowed
Google appeared to be in a better position than its smaller rivals after its earnings report showed that search advertising was holding up relatively well. The thesis has always been that in uncertain times, and with Apple’s privacy changes, marketers are fleeing to what has worked in the past: Google.
“Despite [Google chief financial officer] Ruth Porat’s reference to “retreats in spending by some advertisers” due to rising inflation, supply chain challenges and slowing economic growth,” said Nikhil Lai, principal analyst at Forrester , “Alphabet’s search ad sales increased more than 13% in the second quarter of 2022 to $40.7 billion, beating analyst expectations of $40.2 billion.
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