Twitter will be hit hardest—revenue outlook cut by nearly 40% amid uncertain future

12/1/2022

TOTAL DIGITAL

Total digital ad spending worldwide will not grow as robustly over the next two years as we expected in our Q1 forecast. We now project 2022 digital ad spending worldwide to reach $567.49 billion, up 8.6% over 2021. In our previous forecast, we expected 15.6% growth to $602.25 billion. Our Q1 forecast predicted digital ad spending worldwide would reach $756.47 billion by 2024, but we now expect it to reach only $695.96 billion.

Some digital platforms will be hit harder than others in terms of total ad revenues. However, as the entire digital ad pie shrinks, each player’s share of the market will remain relatively unchanged since our Q1 forecast.

“Economic instability across the globe will lead to lower growth by the end of the year,” said Oscar Bruce Jr., senior forecasting analyst at Insider Intelligence. “China, the second-biggest digital ad market, will post its lowest digital ad growth on record as it deals with tougher regulations and economic headwinds. Europe will see declines in digital ad spend in US dollars given the relative weakness of the local currencies and the economic impact of the war in Ukraine.”

TWITTER

We’ve made the biggest downward adjustment to our Twitter ad forecast, partly due to the overall slowdown in the ad market but also due to the changes Elon Musk is making to the platform. Through the forecast period ending in 2024, we cut our outlook for the social network’s ad business by 39.1%. Please note that this forecast was finalized just prior to the deal closing; however, we built into the forecast the assumption that the buyout would go through.

“Before the takeover, Twitter’s ad business was already taking a beating from the economic

uncertainty,” said Jasmine Enberg, principal analyst at Insider Intelligence. “Tack on Musk’s erratic behavior, his lack of a clear plan for Twitter’s ad business, as well as fears about misinformation and a user exodus, and many advertisers are suspending their advertising on a platform that already isn’t essential to many companies’ media plans.”

We now expect Twitter’s ad revenues worldwide to grow just 4.9% to $4.67 billion this year.  Our Q1 forecast had its revenues growing 25.1% to $5.58 billion, then jumping another 21.6% in 2023 and 16.0% in 2024. We now predict growth will be essentially flat for the next two years. 

“Musk’s attempts to keep advertisers happy have been futile,” said Enberg. “Advertisers are

pulling their ads due to brand safety concerns, as well as potential conflicts of interest with

Musk’s other businesses. Musk’s management style won’t help motivate employees or comfort

advertisers. Many of the employees who could have soothed advertisers’ concerns are now

gone.”

META

This year, we expect Meta’s ad business worldwide to drop for the first time ever.Our new forecast has Meta (the parent company of Facebook and Instagram) generating $112.68 billion in digital ad revenues worldwide in 2022, a drop of 2.0% from 2021—and down significantly from our Q1 forecast of $129.16 billion. Looking forward, we’ve lowered our ad spend forecast for the social network company through 2024 by nearly 20%. 

“Meta is no longer an innovative groundbreaker,” said Debra Aho Williamson, principal analyst at Insider Intelligence. “Zuckerberg’s decision to center his company around a murky and ill-defined concept like the metaverse has jeopardized the near-term health of the company. His vision of the metaverse can’t be willed into reality.”

Instagram’s ad revenues worldwide will fare better but will still grow at a rate significantly lower than its recent history—just 2.6% this year after a 50.2% increase in 2021. Our current forecast has Instagram hitting $43.28 billion in digital ad revenues worldwide this year, compared with the $54.16 billion expected in our Q1 forecast. By 2024, its ad revenues will reach $59.61 billion, which is more than 27% lower than our Q1 projection.

Facebook alone will reach $69.41 billion in digital ad revenues worldwide, lower than the $75.00 billion projected in our Q1 forecast. Our latest 2022 figure represents the first-ever decline in ad revenues worldwide for Facebook, down 4.6% from 2021.

Growth will turn positive again next year—but with tempered expectations. Our current forecast projects Facebook will reach $75.11 billion in ad revenues worldwide in 2024, which is more than $10 billion lower than our Q1 projection.

“Importantly, Meta remains a digital advertising powerhouse. Its ad revenues worldwide will overshadow every other company’s except Google,” Williamson said. “But Meta has lost its edge. Even the metaverse is a copycat idea.”

SNAPCHAT

Snapchat will also be hit hard by the economic slowdown. We now expect Snap to generate $3.97 billion in total ad revenues worldwide this year, up 17.1% over 2021 but below our Q1 expectation of $4.86 billion. 

Snap’s global ad business is expected to grow to $5.81 billion in 2024, 33.6% below our Q1 forecast of $8.75 billion.

“Snap’s focus on augmented reality (AR) isn’t the only reason for the slowdown in ad spending,” Enberg said. “AR is a niche ad format that’s easy for advertisers to justify cutting when budgets are tight. But AR ads only make up a small percentage of Snap’s ad revenues, indicating that advertisers are cutting other types of Snap ads as well.”

“The reality is that many advertisers still don’t fully understand Snapchat and stick it into their experimental buckets. Intense competition from TikTok for the attention of Snap’s core Gen Z user base and continued measurement challenges from Apple’s AppTrackingTransparency changes are also causing advertisers to hold back spending on the platform.”

TIKTOK

Even TikTok, the red-hot favorite of the social networks among Gen Z, will see its ad business take a hit in the coming years. We now expect its global ad revenues to reach $9.89 billion this year, up 155.0% over 2021 but below our Q1 expectation of $11.64 billion.

“TikTok has transformed from an experimental play to a must-buy for many advertisers,” Enberg said. “But TikTok isn’t immune to the macroeconomic challenges causing advertisers to trim their overall digital ad budgets. Meanwhile, growing anti-TikTok sentiment among media executives and renewed calls by government officials to ban the platform are causing some advertisers to be more cautious about their spending there.”

TikTok will continue to grow robustly, albeit at a slower pace than previously expected. We now expect TikTok to reach $18.49 billion in ad revenues worldwide in 2024, which is down 21.6% from our Q1 forecast of $23.58 billion.

“For now, TikTok’s continued strong user and engagement growth, as well as advancements in its ad and measurement offerings, will keep many advertisers funneling money into the platform, including some of the lost ad dollars from other social apps,” Enberg said.

GOOGLE

While we’ve lowered our forecast for Google’s ad spending worldwide, the adjustment was small compared with its competitors, as the main driver of its ad business—search—remains more insulated from the challenges facing rivals who rely more on display ads.

We now expect Google to generate $168.44 billion in net digital ad revenues worldwide this year, down from our Q1 expectation of $174.81 billion. By 2024, Google’s ad business will reach $201.05 billion—that’s just 2.8% below our Q1 expectation.

“Google has an edge over its other ad-reliant competitors in an economic downturn, as advertisers facing budget cuts typically prioritize lower-funnel channels with higher ROI like search,” said Evelyn Mitchell, analyst at Insider Intelligence. “Search has also retained full functionality in the wake of Apple’s privacy changes. Search ads are served in response to a user query and don’t usually leverage data about that user, so they’re less affected when iOS users opt out of being tracked. Meanwhile, social media advertising relies more heavily on consumer data.”

AMAZON

Amazon, whose ad business has grown dramatically over the past several years, will also take a hit. We now expect its 2022 global ad revenues to grow 21.9% to reach $37.99 billion, down slightly from our Q1 forecast of $41.75 billion.

Looking ahead to 2024, we now expect Amazon to reach $55.99 billion in digital ad revenues worldwide, down from the projected $63.48 billion in our Q1 forecast.

“Amazon’s ad business will take a haircut alongside the other ad platforms, but its fast-growing retail media network will be among the most resilient to macro headwinds,” said Andrew Lipsman, principal analyst at Insider Intelligence. “After a first half of the year with slowing growth that coincided with an overall slowdown in ecommerce, Amazon’s ad business regained momentum in Q3 with the help of the July Prime Day—a success it hopes to replicate during the holiday quarter from the Prime Early Access Sales in October.”

Methodology

Insider Intelligence forecasts and estimates are based on our proprietary analysis, and include both quantitative and qualitative data curated from public companies, government agencies, research and media firms, and interviews with expert executives in relevant fields. We regularly re-evaluate available data to ensure our forecasts reflect the latest business and economic  developments and trends.

About Insider Intelligence

Insider Intelligence is a leading research provider focused on digital transformation. We empower professionals with actionable data, insights, and analysis to make informed decisions in a digital world. Formed as a merger of eMarketer and Business Insider Intelligence in 2020, we produce nearly 200 forecasts, 300 reports, 7,000 charts, and 1,500 newsletters across the Advertising, Media, and Marketing; Financial Services; Healthcare; and Retail and Ecommerce industries. Insider Intelligence is a division of Axel Springer S.E.