This summer has been a challenging season for many of the digital companies that rely on targeted, advertising-based, business models. In July, Meta revealed the company’s first-ever year-over-year decline in advertising revenue; Snapchat posted its weakest-ever quarterly sales growth as a public company; and Twitter reported a revenue decline that it said was partially due to advertising weakness. Also in July, Google, which still relies heavily on its search-based advertising for revenues, shared data that illustrated how approximately 40 percent of Gen Z prefers to discover information on visual platforms other than Google, such as TikTok. In response, Google launched a campaign targeted at digital natives of Gen Z, called “Let’s Internet Better.”
All those announcements came one month after the first draft of the American Data and Privacy Protection Act (ADPPA) was revealed to have advanced out of the U.S. House of Representatives’ House Energy and Commerce Committee in a bipartisan vote of 53–2. The bill, if passed by the Senate and signed into law, will prohibit many kinds of targeted-based advertising. Meanwhile, companies with significant amounts of first-party consumer browsing and shopping data, along with large audiences, are continuing to build out advertising alternatives. As recessionary fears soften advertising spending in the short term, attention should be placed on the longer-term shakeup in digital advertising.