Google Struggles with Ad Revenue as Crypto Firms Reduce Spending
Alphabet said that reduced advertising spending by crypto companies has undermined Google's revenue growth during the third quarter of 2022.
The ongoing crypto winter has brought a slowdown 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 in spending on ads.
"In the third quarter, we did see a pullback in spend by some advertisers in certain areas in search," Schindler said. "For example, in financial services, we saw a pullback in the insurance, loan, mortgage, and crypto subcategories."
According to Alphabet's third-quarter earnings call, Google saw a 6% slowdown in revenue growth from 41% a year earlier. Besides 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 ad business.
However, Schindler did not specify how ad pullback from crypto companies has affected Google's revenue.
But the overall drawback of investors from the crypto industry is the plausible reason. As the crypto industry struggles, many investors are fleeing from risky assets and selling out digital coins and related stocks.
Popular digital currencies such as Bitcoin and Ethereum have both lost about 60% of their value in 2022. While popular crypto exchange Coinbase is down by 70%.
Google, however, believes that the ongoing crypto winter is a short-term crisis and opportunities for growth shall rise again in the future.
In early October, Google teamed up with Coinbase to allow some of its clients to pay for cloud services using cryptocurrencies.
The strategic partnership also seeks to cater for the needs of the growing Web3 ecosystem. For instance, developers will have the chance to reliably and instantly operate Web3 networks, eliminating the need for complex and expensive infrastructure.
The collaboration will also see Google Cloud serve as Coinbase’s strategic cloud provider to boost enhanced exchange and data services. Per the report: "Coinbase will use Google Cloud's powerful compute platform to process blockchain data at scale and enhance the global reach of its crypto services by leveraging Google's premium fibre-optic network."
Furthermore, Coinbase's clients will leverage Google Cloud’s data and analytics technologies for machine learning-driven crypto insights.
Google set the ball rolling in Web3 after it assembled a team to create services for developers earlier this year.
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Google Pairs with Coinbase to Spur Web3 Innovations, Offer Crypto Payments for Cloud Services