This is an incredible earnings, you'd think if there were a true recession advertising spend would go down the tubes. That doesn't seem to be happening, if anything the opposite is sort of being laid out on the books here between alphabet and meta.
Putting on your conspiracy hat... there seems to be a very coordinated effort to claim that "big tech" is over and done for. Just look at all the articles regurgitating some form of that. That the end of "free money" killed tech.
If anything, these results show quite the opposite. Google and the like have been quite resilient. Sure, obviously unprofitable companies are done for. We all knew that was coming. But all signs are pointing to a 1-2 year period of realignment rather than anything truly seismic.
Even facebook was able to refocus some of its bets on the metaverse fairly quickly.
All that seems to have changed is that investors are no longer OK with 50+% YOY hiring growth and gigantic bets on obviously moonshot projects taking up a good chunk of the portfolio.
I think partly this is driven by the fed, but maybe more so some eager investors looking to put their weight on the scales in their favor… go figure. Don’t know how that’s conspiracy theory stuff. I agree, it’s surprising how resilient the advertising business is for these two companies.
"Companies that increased ad spend saw success in the long run. Sixty percent of brands that increased their media investment during the last recession saw ROI improvements. Brands that increased paid advertising also saw a 17% rise in incremental sales. By contrast, marketers who cut ad spending risk losing 15% of their revenue during a recession."
It's not unusual for businesses to lay off people and divert the capital towards go-to-market during a recession.
Also the companies who are able to pay for marketing in a recession are biased to be in a strong position already. I wouldn't think that because they spend on ad revenue they performed well, I would take it as they were able to spend on ad revenue and thus survive and do well. Whereas their competitors had no ability and had to likely manage cash flow issues.
