The ad mogul sees Meta recover “extremely strongly” and Amazon’s ad revenue hits $100 billion

Sir Martin Sorrell, Executive Chairman, S4 Capital.

Eóin Noonan | Sports File | Getty Images | web summit

Advertising titan Martin Sorrell believes Meta will “recover extremely strongly this year” and sees promising prospects for US tech giants despite a bloody 2022 and mass layoffs.

US tech companies laid off more than 60,000 workers last year as economic growth slowed, higher interest rates in response to rising inflation and competitive challenges squeezed margins and tech giants’ share prices soared.

Facebook parent Meta announced plans in November to cut 13% of its workforce, equivalent to more than 11,000 employees. It also issued a dismal fourth-quarter guidance that wiped out about a quarter of its market cap and pushed the stock to its lowest level since 2016.

A general slowdown in online ad spending and competition from new rivals like TikTok, as well as challenges surrounding privacy changes in Apple’s iOS, have hampered the social media group’s business over the past year.

The company has also suffered significant damage from its massive investments in building its augmented reality world known as the Metaverse — a strategy that has proved divisive among analysts and investors.

Sorrell, CEO of the British advertising agency S4 capitalexpects Meta to overcome most of its business challenges in 2023 while benefiting from China’s reopening.

Sorrell: Meta will recover

“I think you’ll see Meta come back extremely strong this year on the back of Reels and Business Messenger to take on competition from TikTok and other short-form video competitors,” Sorrell told CNBC on the sidelines of the World Economic Forum in Davos, Switzerland.

“Google had a solid year last year and I think they will have a strong year this year. Amazon increased its ad revenue from $31 billion to $41 billion I think [it] will reach $100 billion over time regardless of what you see in terms of jobs and hiring.

He also suggested that the reopening of China’s economy would be “huge” for big tech companies, noting that Chinese outbound stores or Chinese companies expanding their operations overseas have historically been the second largest profit centers for companies like Meta, Amazon and others were Google’s parent Alphabet.

Sorrell launched S4, which operates in both digital advertising and digital transformation, after leaving advertising giant WPP in 2018. S4 confirmed its full-year guidance on Wednesday, and Sorrell said its clients’ adspend priorities in 2023 would be “revenue growth in activation and performance” and “reduction [the] costs of digital transformation.”

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