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Why Social Media Giants Are Looking to Diversify Revenue Streams Amid an Ad Market Slowdown

The ad market slowdown has left many wondering about the slump’s direct cause. Some blame it on the pandemic, while others blame it on the looming recession in the United States, citing the Great Recession of 2008, in which ad spending plummeted; however, this time seems different. Although inflation has become inescapable, consumer spending is still relatively high, leaving most social media giants concerned about the future of business advertising while looking for the most effective ways to diversify revenue streams.

Shrinking Ad Budgets Creating Cause for Concern

Meta, Facebook’s parent company, reported a decline in ad spending in July 2022. It was the first decline for the social media giant after experiencing continued ad revenue growth over the past 10 years. Meta is one of many social media companies noticing an ad market slowdown. Shrinking ad budgets is becoming increasingly common across social platforms, including Google and Snap. For example, Snap Inc. reported no revenue growth during one of its busiest quarters for the holiday season, sending shockwaves through the tech industry. These companies have traditionally relied heavily on ad revenue. The driving forces behind the macro-environment, like inflation and a cooling economy, have come during a season where spending is usually at an all-time high, and most would expect an uptick in social media advertising revenue.

Diversifying the Platform Strategy to Keep Consumers Engaged

To overcome these headwinds, social media giants should consider taking a page out of China’s playbook by diversifying their platform strategies. Focusing on building communities to increase engagement, tapping into shoppable video trends, and leaning further into gaming can strengthen their connections with audiences.

Shoppable Video Trends

More platforms are embracing shoppable video trends because they’re engaging, resonate with targeted audiences and enable advertisers to build trust through influencers. Shoppable videos are on trend, concise and bring value to consumers, capturing their attention and keeping them engaged even at the lower end of the funnel. YouTube is one example of a company looking to enhance its shoppable offerings. Adding shoppable features can boost sales from ads while giving consumers new roads to product discovery.

Furthermore, providing consumers the option of shopping directly in-app can yield better results. It’s simple, straightforward and takes little to no effort on the consumer’s behalf to add products to the cart and checkout. It’s this frictionless approach that TikTok Shop looks to take advantage of. TikTok users can shop through the app, and brands have already seen success, regardless of the user journey. “TikTokMadeMeBuyIt” is now a common adage and is a feature that TikTok took directly from Douyin, TikTok’s Chinese sister app.

TikTok Shop is also complementary to the surge in Livestream shopping. In this space, influencers go live on their favorite platforms, provide product recommendations, showcase brands, and encourage followers to buy or download. The livestreaming method is very genuine and there is no need for much creative input from the advertiser, thus saving them costs. Now a hallmark of Chinese social media, livestreaming is catching on in the West as it has a low barrier to entry with high upsides in terms of sales. In fact, revenue from livestreaming is growing at nearly double the rate of TikTok’s ad business.


The mobile gaming industry is massive, so leveraging it to combat the ad market slowdown can be incredibly effective. Platforms that can provide in-app gaming will inevitably increase engagement and provide a community of similar users. Building a gaming community will increase user retention and have other downstream benefits like boosting the effectiveness of similar app install ads. TikTok, for instance, has been testing lightweight, easy-to-develop HTML5 in-app games from several top publishers, including Voodoo and Zynga. This strategy looks to tap into the platform’s high average session length and engagement rates and is perfect for IP-driven hypercasual and casual titles that are fast-paced and easily recognizable with little to no learning curve. This approach is similar to Netflix, which has also doubled down on building its gaming platform for similar reasons. 

Although the ad market slowdown has caused concern for social media giants, many are working around the clock to diversify their platforms, add new features and provide consumers with greater convenience while adding to their revenue streams. With creative and diverse strategies, marketers can improve their business advertising efforts and achieve better outcomes.

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