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Crypto Winter is Hurting Google’s Ad Empire
Not even Google is immune from the Crypto winter.
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Philipp Schindler, Google’s chief business officer, attributed a slowdown in revenue growth, in part, to decreased ad spending by cryptocurrency companies and other financial institutions during Alphabet’s third-quarter results call on Tuesday.
“We did notice a decline in expenditure by some advertisers in particular categories in search in the third quarter,” Schindler added. “For instance, we observed a downturn in the insurance, loan, mortgage, and cryptocurrency subcategories in financial services.”
With the exception of the first quarter of the pandemic, Google’s overall ad growth of 6% in the quarter was the lowest since 2013. From the previous year, YouTube ad revenue decreased. The “difficult macro climate,” according to CEO Sundar Pichai, is affecting Google’s ad business.
Schindler made two references to the crypto pullback but offered no further context or details. The cryptocurrency market has suffered in 2022 as a result of investors’ flight from hazardous investments and their selling of digital currencies as well as the linked equities that they had bid up over the previous two years.
Both Bitcoin and Ethereum have seen a value decline of almost 60% this year. Coinbase, a cryptocurrency exchange that went public in 2021, is down more than 70%. In the meantime, the sector has been plagued by bankruptcies as lenders and hedge funds experienced a decline in liquidity and, in some circumstances, were compelled to make debt repayments. Some of the more well-known companies that were forced into bankruptcy include Celsius Network, Voyager Digital, and Three Arrows Capital.
Businesses elsewhere have made cuts. Blockchain.com fired 25% of its employees in July, Coinbase fired 18% of employees the month before, and Crytpo.com fired two rounds of employees this year.
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.
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