If advertising comprises 72% of revenue for one company and 98% for another, how would you describe these corporations? You’d likely call them advertising companies.
But these two “advertising companies” are Alphabet (NASDAQ: GOOGL) at 72% and Meta Platforms (NASDAQ: META) at 98%. They definitely don’t want to be identified by the biggest source of their revenue.
Both stress their work in artificial intelligence. Alphabet, of course, has the dominant Internet search function, fast-growing YouTube and Google Cloud.
Meanwhile, Meta holds social media titans Facebook, Instagram and WhatsApp. It’s also diving deep into virtual reality, though it’s unclear whether that will pay off.
You are what you are
All this is very impressive for the two companies, but it doesn’t hide their dependence on good old ads. Of course they aren’t like what we normally think of ad companies – ones that are in the business of making and buying ads for others. But Alphabet and Meta are nonetheless reliant on ads.
To be sure, that dependence could lessen going forward, particularly for Alphabet. It already has seen the advertising portion of its revenue dip from 80% in 2020 to the current 72% level.
At present, however, Alphabet and Meta are advertising companies – for better or for worse.
The author owns shares of Alphabet and Meta.
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