Google acknowledges that the downturn in digital asset markets that caused the current crypto winter is harming search spending.
It was the only time in almost a decade that advertising growth dropped to a low in the third quarter, the tech company said this week.
With Fewer Crypto Ads, Google Registers 6% Ad Revenue Growth In Last Quarter
Google is a giant online advertising platform. Google believes the slowdown in revenue growth is partly due to lower advertising spending by financial institutions, including those dealing in crypto assets.
Google, late Tuesday, 25 October 2022, reported its weakest ad growth in nine years. During a conference call with its parent company, Alphabet, on Tuesday, Google Chief Business Officer Philipp Schindler acknowledged that search spending declined in the third quarter, saying:
“For example, we saw a pullback in the insurance, loan, mortgage, and crypto subcategories in financial services.”
In a report citing executives, CNBC said total ad volume increased 6% in the three months, the lowest for Google since 2013, with one exception when the Covid-19 pandemic began. CNBC reported that YouTube’s ad revenue fell to $7.1 billion from $7.2 billion in the third quarter of a year ago.
“We are seeing some advertiser spending declines in certain search areas,” chief business officer Philipp Schindler said in an interview with analysts after the company reported earnings. “We saw declines in subcategories of insurance, credit, mortgages, and cryptocurrencies.”
YouTube is also Affected
You tube’s ad revenue is also declining year by year. Google CEO Sundar Pichai cites the impact of the challenging macro environment on the ad business.
In a note to clients, Canaccord Genuity analyst Maria Ripps said, While travel and retail were once again the most significant contributors to growth, Google saw an increase in financial services from insurance, credit, mortgage, and crypto advertisers. We have seen a reduction in spending on the industry.
“Networks and YouTube also face challenging comp and FX headwinds. Management expects broader macroeconomic uncertainty that began in the second quarter to accelerate declines in spending from brands in the third quarter,” she added.
Leading cryptocurrencies such as Bitcoin (BCH) and Ethereum (ETH) have lost almost 60% of their value in 2022 compared to all-time highs. Since then, the crypto industry has seen a string of hedge fund and lender bankruptcies, such as Celsius Network, Voyager Digital, and Three Arrows Capital, as well as the downswing of companies such as Blockchain.com and Crypto.com.
Major US cryptocurrency exchange Coinbase has cut its workforce by 18% and its stock by 70% this year after its 2021 IPO. Google announced a cryptocurrency trading platform partnership in the third quarter of this year.
In early October, Google announced it would rely on Coinbase to enable customers to pay for cloud services with cryptocurrencies in 2023. Coinbase is expected to move its data-related applications to Google’s cloud.
Aside from the bear market that caused crypto advertising to fall, the crypto advertising space is also under pressure from regulators. Regulators have read uproar over cryptocurrency promotional activity from the UK to Singapore.
Crypto Influencers in Trouble
Cryptocurrency influencers are also under scrutiny in places like the US and India. Indian authorities are investigating crypto ads run by domestic social media personalities. According to a report last summer, the influencer is behind more than 90% of his misleading cryptocurrency ads online in India.