Snap warning feeds concerns over social media ad splurge
BNN Bloomberg
A warning from Snap Inc. is rattling technology investors who have got used to turbocharged growth in ad spending on social media.
A warning from Snap Inc. is rattling technology investors who have got used to turbocharged growth in ad spending on social media.
Executives from the maker of Snapchat said Thursday that supply-chain bottlenecks are prompting companies to hold back on online ad spend for the upcoming holiday season, meaning sales will rise by only around 30 per cent in the fourth quarter compared to analyst estimates of nearly 50 per cent.
The comments took the market by surprise and set the company’s stock on course for its biggest ever decline.
The announcement adds to growing concerns over whether the wall of money that’s been shifted from traditional marketing to social media in recent years is being well spent.
Social media will account for 39 per cent of ad budgets next year, even though they will only represent 21 per cent of daily media consumption, according to a study from industry researcher WARC on Thursday. The discrepancy adds up to a gap of US$94 billion, it said.
It’s been getting harder to judge whether social media ad spend is really working because Apple Inc. and Alphabet Inc.’s Google are making it more difficult for advertisers to track consumers online.
