Internet business models based on advertising are under strain after the ‘golden’ time during the shift to online with the global pandemic. Online advertising growth was 38% in 2021 compared to its average annual growth of 21%.
Here are some reasons why the growth in online advertising won’t continue:
- Online advertising is becoming a mature and saturated industry.
- Growing pressures on privacy and data protection is reducing the use of tools for targeted advertising.
- Apple’s iPhone privacy setting changes prevent tracing the reach and impact of advertising campaigns which has affected many companies. It has reduced Meta/Facebook’s annual revenue by US$20 billion (8%) for example.
Meta/Facebook and smaller companies are most affected by the slowdown in online advertising. Google/Alphabet is doing well as it has built advertising around a search engine, which is a more traditional approach to online advertising.