Is online advertising in crisis?
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.