Social Media Ad Revenue Declines in Q4

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Social Media Ad Revenue Declines in Q4

By Movieguide® Contributor

Social media companies’ fourth quarter earnings results showed a continued decrease in digital ad revenue. 

Snapchat parent company, Snap, reported a flat year-over-year revenue growth. Their stocks have dropped 15%, and they expect a 10% revenue drop in the current quarter. 

“We continue to face significant headwinds as we look to accelerate revenue growth, and we are making progress driving improved return on investment for advertisers and innovating to deepen the engagement of our community,” Snap CEO Evan Spiegel said.

Meta, Facebook and Instagram parent company, expected a similar drop, and while revenue declined 4% in Q4, this result was better than what Wall Street initially anticipated. The following day, stocks shot up 23%, making it the company’s best day in over a decade. 

“Our community continues to grow and I’m pleased with the strong engagement across our apps. Facebook just reached the milestone of 2 billion daily actives,” said Meta CEO Mark Zuckerberg. 

This report comes after the company laid off 11,000 people late last year. 

Google and YouTube parent company Alphabet also saw an ad revenue decrease. Variety reports that YouTube saw an 8% revenue drop in the fourth quarter, making it the video platform’s second consecutive quarter of decline and dropping Alphabet’s stock 4%. 

PP Foresight analyst Paolo Pescatore explained that this drop “is extremely worrying and highlights the popularity of rival services such as TikTok and Facebook Reels with short-form content.”

Additionally, as the economy continues to decline, Variety reports that “Advertising, and specifically digital advertising, is bracing for more tough times ahead.”

Movieguide® previously reported on social media companies’ decline: 

Experts say that investor loyalty could falter after first-quarter financial results for major social media companies Twitter, Meta, and Snap show continued decline.

According to Variety, Q1 results for major social media platforms posted their third consecutive quarter of financial decrease. Moreover, video-sharing giant YouTube’s ad revenue decreased “significantly,” the outlet reported.

The article sites the conflict in Ukraine, inflation, and higher interest rates as some of the factors that could contribute to diminished ad budgets.

The outlet reported that Snap stock fell by 40% while Meta’s dropped by 38%. Due to the impending purchase of Twitter by Tesla CEO Elon Musk, the social media giant reported an increase of almost 15%.

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