Tech firms suffer as ad revenue declines following the pandemic

Google, Meta, and Amazon earned more than half of the total ad revenue generated in the US in 2020 for the first time. However, the gradual waning of the pandemic has put a dampener on things.

Amazon’s advertising business grew 25 percent year on year, outpacing other major tech platform competitors. But this pace is sharply down from the 75 percent growth from a year ago. The company’s earnings suggest that some of that lustre may be fading, as Russia’s invasion of Ukraine, and China’s Covid struggles hamper its business.

In the first three months of 2022, Google parent Alphabet’s ad revenue grew by 22 percent, Meta Platforms’ ad revenue grew by 6.1 percent and Amazon’s grew by 23 percent.

Meta’s shares plunged about 26 percent, erasing $250 billion or over a quarter of the company’s market value, after its Q1 earnings were announced in February.

Facebook saw global daily active users decline from the previous quarter and bet heavily on the Metaverse, which doesn’t generate returns at this stage.

YouTube missed the mark with ad sales for the video platform grew only 14 percent to reach $6.87 billion, which fell short of expectations by over $600 million.

Amazon saw a net loss of nearly $4 billion even though it witnessed a 7 percent increase in net sales. The company admitted that it has gone from being understaffed to overstaffed, as growth in e-commerce sales slows down and labour costs rise.

Ad revenue has dropped and customers are likely to reduce spending due to rising fuel costs and inflation.