According to a recent study, tech behemoths such as Meta Platforms Inc., Alphabet Inc., Snap Inc., and Twitter Inc. are facing a paradigm shift as their respective ad revenues start dwindling after experiencing explosive growth last year, primarily due to the pandemic-induced lockdowns.
Analysts predict that the revenues for each of the firms are estimated to be reduced by double-digit percentages by the year 2025, raising serious concerns for the digital platforms.
It is worth noting that digital ad spending had increased by 38% in 2021 when compared to 2020. Alphabet, the world’s biggest digital advertising platform, reported annual revenue of USD 257 billion in the year 2021.
Sources claimed that the Russia-Ukraine war, which is heavily influencing inflation around the world, as well as a drastic reduction in the push given to advertising post-COVID-19, is poised to have a long-term impact on earnings for years to come.
During the pandemic, businesses found it easy to flourish as they were saving out on operational costs such as expansion, office space, and so on, giving them more legroom to work on their marketing budgets. This, combined with brands spending on targeted ads to drive customers online, fueled an unparalleled surge in the advertising industry.
Now that the pandemic is nearly over, e-commerce sales have returned to pre-COVID-19 levels. Corporate expenditures, on the other hand, are likely to soar as offices reopen, putting a noticeable dent in their pockets.
Faced with a harsh reality, the utter reliance on advertising has many worried about the long-term progress of digital advertising. Seasoned researchers indicate that given the circumstances, the online advertising market in the United States will expand by 12.5 % per year through 2025, lower than the previous estimate of 18.5 % per year.