Interesting dynamic here with echoes of the .com bubble where there is a huge web of industries all dependent on the current setup continuing and money being available for consumer spending and ads - when that dries up it will impact not just those selling goods imported from China, but everyone in the US.
Disrupting US trade quickly with massive global tariffs will cause all sorts of secondary effects like a massive downturn in ad spending - directly affecting companies like Meta and Google who look insulated right now because they don't sell physical products.
Not a great time to be dependent on ad revenue.
Conclusion is wrong here. There’s plenty of bid for the ad inventory. Google and meta are extremely resilient to this kind of thing
I can't see how can add industry be resilient to recession. Maybe if you switch to selling ads for government propaganda?
So generally speaking, advertising is not resilient to downturn.
In 2008, there was an expectation of revenue loss. But because Google "direct advertising" directly affects sales... it was more like "sales" than traditional "marketing" in this respect.
In 2025, it may be different. We shall see.
I don't think much online ad revenue is related to physical products. The margin available for ad spend on physical goods is much slimmer. But... it's hard to predict 3rd order effects.
Advertising on the whole is not recession proof[1], although in the last two dips Google showed growth in ad revenue[2], and Meta was relatively stable[3].
The first thing that gets cut is 'new channels' and experiments (read: channels that have bad measurable ROI). Pinterest, X, Snap.
After that it's the most 'wasteful' brand spending/high cost per reach broadcast media that gets cut. Cinema, local TV, and increasingly nationwide TV.
Then when the economy comes back to growth there's a broader recalibration of budgets.
Because Google search has a very simple, easy to understand impact on sales they actually grew faster in recessions. Then when the recession ends brands don't see any reason to cut that spending.
1 - https://www.ibisworld.com/us/bed/total-advertising-expenditu... 2- https://www.statista.com/statistics/266249/advertising-reven... 3 - https://www.statista.com/statistics/268604/annual-revenue-of...
Google search (and online direct marketing broadly) have pretty direct impact on sales. It's true that they held up well, relative to "traditional advertising" in recent downturn.
However... there are a lot of money losing campaigns out there. A lot of that relates to economic buoyancy. Startups showing growth for the next round. But also established companies getting into new sectors, defending market share, etc.
We are still, I think, in a "greed mode" economy. Fear hasn't really shown it's face yet. If that switch flips... I suspect meta/alphabet will be impacted this time.
It's really hard to tell though.
I do agree, Google and probably Meta even more so are likely to be impacted now just because they've become so overwhelmingly dominant. There's nowhere else left to cut for a lot of brands.
What will be more interesting though is if that money comes back to Meta or Google, or if people will find new, better opportunities while they pull back (eg. what happened to TV in 08).
Meta are concerned about this and already trying to book in bulk sales for next year with agencies which is something they've never done before https://digiday.com/media-buying/meta-moves-into-controversi...
Interesting. Preselling ads huh?
I think your point about dominance is a main player. I can make a dozen cases for LLMs as world of opportunity and compliments for both of these companies.
It takes a lot of opportunity/gain to hedge against the risk of losing 20% of search or social media revenue.
If you already have the whole market, losing share is easier than gaining.
But to a dominant incumbent..."threat" just tends to come with bigger multiplier.
Not sure experiences from the covid recession tell us anything. That was a very short sharp shock followed by massive bailouts and stimulus for companies and individuals. The figures for that time period are not useful as comparators.
Even when this kind of thing is a global recession and the end of US supremacy?
If they stick with the tariffs we’ll see I guess though it seems likely Trump will have to back down.