Google struggles with ad revenue as crypto firms cut spending
Alphabet said reduced ad spending by crypto companies has undermined Google’s revenue growth in the third quarter of 2022.
The ongoing crypto winter has led to a decline in ad spending, as the overall market sentiment has turned negative since the beginning of 2022. Many companies have gone bankrupt, such as Celsius Network, and other crypto companies have become hesitant to invest during this market downturn period.
According to Google’s chief business officer Philipp Schindler, other financial firms have also become hesitant to use ads.
“In the third quarter, we saw a decline in spending by some advertisers in certain areas of search,” Schindler said. “For example, in financial services, we saw a pullback in the insurance, loans, mortgages and crypto subcategories.”
According to Alphabet’s third-quarter earnings call, Google saw revenue growth decline to 6% from 41% a year earlier. Apart from the one quarter at the beginning of the pandemic, this result was the weakest for any period since 2013.
CEO Sundar Pichai stated that the “challenging macro climate” has affected Google’s advertising business.
However, Schindler did not specify how the withdrawal of ads by crypto companies has affected Google’s revenue.
But the general disadvantage of crypto industry investors is the plausible reason. As the crypto industry struggles, many investors are fleeing risky assets and selling out digital coins and related stocks.
Popular digital currencies such as Bitcoin and Ethereum have both lost roughly 60% of their value in 2022. While popular crypto exchange Coinbase is down 70%.
However, Google believes that the ongoing crypto winter is a short-term crisis and the opportunities for growth will rise again in the future.
In early October, Google teamed up with Coinbase to allow some of its customers to pay for cloud services using cryptocurrency.
The strategic partnership also seeks to address the needs of the growing Web3 ecosystem. For example, developers will have the chance for reliable and instantaneous operation of Web3 networks, eliminating the need for complex and expensive infrastructure.
The partnership will also see Google Cloud act as Coinbase’s strategic cloud provider to boost enhanced exchange and data services. According to the report: “Coinbase will use Google Cloud’s powerful computing platform to process blockchain data at scale and enhance the global reach of its crypto services by leveraging Google’s premium fiber optic network.”
Furthermore, Coinbase’s customers will leverage Google Cloud’s data and analytics technologies for machine learning-driven crypto insights.
Google set the ball rolling in Web3 after putting together a team to create services for developers earlier this year.
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