As the second quarter results of digital advertising and social media companies are relayed into the financial markets, there are concerns that growth and spending have reduced across the board.
While Google’s revenue showed a 16% rise to $69 billion within the quarter, net profit was down by 14% to $16 billion on a year-on-year basis. For Google Wall Street expressed less disappointment as the company’s stock made strong gains after the result was announced.
However, the picture was further negative for Meta, the parent company of Facebook and Instagram and Snap Inc., the parent company of Snapchat. While Meta announced that its net profit fell 36%, to $6.69 billion, Snap said its total revenue for the period was $1.11 billion versus $1.14 billion expected by Wall Street. A moment of reckoning for these two companies was an over 30% plunge in the stock of Snapchat and about 17% for Meta.
While Meta said it has paused hiring, the company also committed to shrinking its workforce by a considerable number. Snap said its forward-looking visibility remains incredibly challenging and that the company is not satisfied with its results.
From the bigger picture, we can deduce that the digital advertising business has deteriorated due to the combination of major economic headwinds and advertisers are speaking with their budgets. As brand custodians and a major player in the online and mobile advertising business, we continue to see a pullback in most experimental and broad audience targeting formats and platforms for advertising.
As evident in the performance of Google, we believe micro-targeting is becoming more important in order to cut waste and get better results. While the outlook for the segment remains uncertain, we believe the continued increase in summer and holiday spending could push bottom lines into positive territories in the coming quarters and therefore brands should have a consistent strategy to cash in on the opportunities.
It is time to be forward thinking in executing a cutting-edge digital transformation for your brand; talk to us reach out to us via email: info@sbimedia.com.ng
