Google’s Ad Empire is suffering from the crypto winter
Many enterprises in the sector are now experiencing a liquidity issue as a result of the collapse in cryptocurrency prices and the beginning of a new so-called “crypto winter.”
Even Google cannot escape the Crypto winter.
On Tuesday during Alphabet’s third-quarter results call Philipp Schindler, Google’s chief business officer, attributed a slowdown in revenue growth, in part, to financial institutions’ lower ad expenditures.
According to Schindler, “in the third quarter, we did witness a decrease in spend by some advertisers in specific areas of search.” For instance, the insurance, loan, mortgage, and cryptocurrency subcategories in financial services experienced a decline.
Other than the first quarter at the start of the pandemic, Google’s overall ad growth of 6% in the quarter was the lowest for any quarter since 2013. A year ago, YouTube ad revenue decreased. According to CEO Sundar Pichai, Google’s ad revenue is being impacted by the “difficult macro climate.”
The crypto pullback was mentioned twice by Schindler, but no further details or context were offered. As investors left hazardous assets and sold off digital coins and the corresponding stocks they had pushed up over the previous two years, the cryptocurrency market suffered in 2022.
This year, the value of bitcoin and Ethereum have both decreased by around 60%. The 2021 IPO of the cryptocurrency exchange Coinbase has seen a decline of more than 70%.
In the meantime, the industry has been plagued by bankruptcies as lenders and hedge funds have experienced a lack of liquidity and, in some circumstances, have been forced to default on obligations. Among the more recognizable companies that were compelled into bankruptcy were Celsius Network, Voyager Digital, and Three Arrows Capital.
Companies have cut back on staff elsewhere. A 25% personnel reduction at Blockchain.com, an 18% staff reduction at Coinbase and two rounds of layoffs at Crytpo.com were all implemented in July.
Since Google sees definite potential for growth in the future, there is hope that the crypto selloff is only a temporary blip. Google stated earlier this month that starting in 2023, it will rely on Coinbase to enable consumers to pay for cloud services with cryptocurrency.
Additionally, Coinbase will switch from Amazon Web Services, which the business has been reliant on for years, to Google’s cloud infrastructure for apps that deal with data.