Meta, which owns Facebook, must have had the slowest growth in ad revenue in a decade in the first quarter as companies cut ad spending against a backdrop of rising inflation and war in Ukraine.
Advertising and marketing budgets globally will be further squeezed if the crisis in Ukraine continues into the coming months. Thus, some analysts project that Meta will also release a tepid estimate for the current quarter this Wednesday (27).
Meta ad revenue is expected to have risen 8.7% in the first quarter, according to analyst projections compiled by Refinitiv, the slowest pace since 2012.
Analysts on Wall Street also said Facebook could be losing ground in the global ad market, even as digital advertising trumps traditional methods.
“The Meta’s projections for a slowdown can also be read as a reduction in the potency of the Facebook brand,” said Sophie Lund-Yates, an analyst at Hargreaves Lansdown.
Meta has lost nearly half its market value since Feb. 2, when it announced a decline in Facebook’s daily active users for the first time and predicted a dismal quarter for the start of this year.
Alphabet, which owns Google, hinted at what could come the day before, citing the war in Ukraine as a reason for slowing YouTube ad sales. Snap warned that inflation, labor shortages and other economic challenges could put pressure on ad revenue.
The timing couldn’t have been worse for tech companies that rely on ad revenues, as the industry also faces policy changes at the App Store, Apple’s app store, and increasing competition from other companies such as TikTok.
“The cost of acquiring customers on digital channels like Facebook has increased, while the ability to reach customers has decreased,” said Mitchell Olsen, assistant professor of marketing at the University of Notre Dame.
As a result, many brand managers are reducing their exposure to Facebook and reallocating ad budget across platforms, Olsen added.
Target is expected to report earnings per share of $2.56, according to estimates.
From 63 analysts, the company has 45 recommendations equivalent to “buy”, 16 to “maintenance” and two equivalent to “sell”. The median stock price target is $325.
Meta’s share was down 4.9% at 3:10 pm (Brasilia time).
Source: CNN Brasil
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