Earnings season is fast approaching, and all eyes will be on how advertising businesses, under pressure from privacy changes and competition from fast-growing TikTok, are holding up amid a souring economic climate.
A slowdown from last year’s blockbuster ad revenue growth is likely as companies tighten digital marketing budgets and the pandemic-driven surge in e-commerce fades. Expectations for “growth this year were a little bit outside of what was really achievable,” Kate Scott-Dawkins, global director of business intelligence for ad-buying mammoth GroupM, told The Information.
The economic deceleration has caught companies and investors off guard—Snap, for instance, stunned investors in mid-May when it warned second-quarter revenue would likely come in below the range it had given just a month earlier. With inflation running high, luxury brands in particular could pull back on advertising as consumers trim spending. Still, there are bright spots: Political ad spending could offer some companies a boost as midterm elections approach, researchers and analysts say, while categories like travel marketing should continue to see a strong rebound.