According to The Snap Company’s announcement on Tuesday, May 24th, it will miss its projections because of decreased ad spending. As a result, many ad-driven supertechs, such as Google and Facebook, experienced a spiral effect. Given the current environment, along with increasing ad prices and macro headwinds likely to impact every area of digital advertising, this should not have come as a surprise.
CNBC reported that social media companies were already suffering from a decrease in digital advertising due to rising inflation, supply chain challenges and the conflict in Ukraine. The second quarter forecasts called for meager growth at best, and stock prices were declining.
Considering Snap’s disclosure, JMP Securities analysts stated, “Macro headwinds likely extend to all digital advertising.” They added that direct response ads, which attempt to encourage consumers to act immediately, are “more closely connected to consumer spending, particularly on eCommerce.”
In an environment that is highly volatile, retailers are seeking alternative means to cut down their advertising expenses.
