Market analysis Google and Facebook, which dominate the advertising world, want to innovate, but it can get expensive.

HS Visio|Market analysis

Google The growth of Meta, which owns the parent company Alphabet and Facebook, reflects the growth of the digital advertising market. The companies announced their 2021 results this week.

Meta, which invests in virtual and augmented reality, and Alphabet, which develops its cloud services, are advertising waste, even though they are different companies.

During the pandemic, digitalisation has progressed briskly and e-commerce has grown in popularity. People have spent more time at the boxes. Much of the world’s ads are seen through Facebook or Instagram, as well as Google ad slots or Youtube.

Of Meta’s $ 33.7 billion revenue in October-December, $ 32.6 billion came from advertising. Net sales increased by a fifth from the previous year.

Alphabet’s advertising revenue rose a third to $ 61.2 billion. The company as a whole had a turnover of just over $ 75 billion. There was strong growth in traditional search engine advertising, but also Youtube advertising.

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Meta is developing the Reels feature on Instagram, and Google is investing heavily in Youtube Shorts.

The stock market Google’s result was received by wearing shopping pants. Company intends split its shares in the summer, which is expected to attract private investors and prop up market value.

Meta’s share plummeted on Thursday. It was the fastest melting in value in U.S. stock market history, with the company declining in value by more than $ 230 billion a day.

The market values ​​of technology giants are so huge that the big swing in their stocks affects the entire market.

Meta’s result weakened for the first time since 2019.For the beginning of the year, the company expects a 3–11 percent increase in net sales from last year. Growth of less than 11 percent would be the slowest in the company’s history.

The growth in the number of users of Meta’s applications is slowing down. In the advertising business, the big cry is also Apple, which last year decided to restrict the ability of third parties to collect information about app users.

Targeting advertising is at the core of Meta’s business. The changes Apple will make will cost Meta about $ 10 billion this year.

Competition is harsh against Chinese Tiktok. Meta is developing the Reels feature on Instagram, and Google is investing heavily in Youtube Shorts.

Reels is Meta’s fastest growing product, but it doesn’t generate as much cash flow as Instagram’s traditional content stream or Stories feature. Reels is a similar service to Tiktok, the contents of which are often distributed on Reelssein.

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Google dominates the global search engine market.

About the forecast depending on the global advertising market is expected to grow by 9-12% this year.

Media agency group M predicts that 80-90 percent of digital advertising outside China this year will come through Alphabet, Meta and also Amazon platforms.

For the full year last year, Meta’s advertising revenue was $ 114.9 billion. According to Zenith, who predicts the advertising industry, social media advertising will surpass television advertising this year and grow to $ 177 billion.

Meta and Alphabet is developing its business in new directions. It makes sense because companies are under intense regulatory pressure in the United States and Europe. Acquisitions can be tricky if the power of companies is to be curtailed.

Alphabet’s fast-growing cloud services business made a $ 890 million loss at the end of the year. The company plans to increase its six percent share of the cloud market, with Amazon covering 41 percent and Microsoft a fifth.

For the first time, Meta broken down its business into a metaverse, Reality Labs.

Towards the end of the year, Reality Labs had revenue of less than $ 900 million and a loss of $ 3.3 billion. The road to the metaverse looks bumpy.