Tech's winning streak in ads may be short-lived, analysts note
Major tech firms posted strong advertising revenues in the first quarter of 2025. Meta, Alphabet, and Amazon reported better-than-expected earnings, reflecting continued demand for digital advertising. Meta and Google saw advertising growth of 16% and 9%, respectively, while Amazon’s ad unit surged 19% from the previous year.
Smaller firms like Snap, Pinterest, and Reddit also exceeded expectations. Advertising tech companies such as AppLovin and The Trade Desk reported strong earnings, with AppLovin’s shares rising nearly 15% after it announced the sale of its gaming unit, and The Trade Desk stock jumping 18% on a strong earnings report.
Tariff fears cloud outlook
Despite positive first-quarter results, executives signaled caution about the rest of the year. According to a report from CNBC, concerns stem largely from a shift in US trade policy under president Donald Trump, particularly the retraction of the de minimis trade loophole that once benefited low-cost Chinese retailers like Temu and Shein. Meta CFO Susan Li noted that Asia-based e-commerce advertisers are scaling back, impacting digital ad spend.
“It’s very early, hard to know how things will play out over the quarter,” Li said, pointing to the uncertainty surrounding ongoing trade tensions and their ripple effects across the global economy.
Alphabet and Pinterest executives echoed this sentiment, while Snap declined to offer second-quarter guidance, citing unpredictable macroeconomic conditions. Jeff Green, CEO of The Trade Desk, said marketers are navigating “increased macro volatility” and making cautious moves.
Ad market faces ripple effects
Analysts warn that consumer goods companies like Procter & Gamble—responsible for nearly half of US social media advertising—are also reining in marketing budgets. Jasmine Enberg of eMarketer said this trend could disproportionately hurt smaller platforms.
“I think what we’re likely to see is what we tend to see in times of economic uncertainty, which is that advertisers seek refuge in larger platforms that provide them with scale and consistent ROI,” Enberg said, suggesting that companies may prioritize returns over experimentation.
Even so, larger firms may not be immune. Greg Silverman of Interbrand noted that the loss of ad dollars from retailers like Temu, who spent aggressively due to favorable trade rules, may not be easily replaced.
Wells Fargo strategist Sameer Samana said the broader market may soon feel the impact of escalating tariffs. “Tariffs at the end of this are going to be meaningfully higher, and that is just not good for markets,” Samana noted.
