Brand effects: For most brands, the geopolitical reverberations of the war are the biggest challenge, not immediate revenue losses. Few of the world’s biggest tech or consumer brands are highly dependent on operations in Russia. Even so, some companies have felt pain.
- Social media giant Meta said the Ukraine war hurt its Q1 2022 results, citing “a further deceleration in growth” because of lost revenue in Russia and “reduction in advertising demand both within Europe and outside the region.” Meta also suffered because it stopped taking ads from Russian companies globally.
- Meanwhile, Snap said that advertiser concerns over the war contributed to a slowdown in its Q1 revenue growth.
- Media and retail companies—among them Netflix, Warner Bros. Discovery, and Amazon—paused or closed operations in Russia, but these moves won’t have a major impact on their bottom lines. Netflix, for example, lost 700,000 Russian subscribers, amounting to less than 1% of its 221.6 million worldwide paid subscriptions.
- Some companies, like McDonald’s—which recently announced it would sell its business in Russia—have had greater-than-average exposure, but for many, the biggest challenge will be the instability in global markets and higher pricing brought by the war.
Why it matters: The war could exacerbate economic challenges that are already straining the ad spending environment. Although Ukraine and Russia’s ad markets represent a tiny percentage of the global total, the war could have a wider-ranging impact on the ad industry eventually.
- Inflation, the tech downturn, and impending recessionary conditions are aggravating the ad spending deceleration that was already underway worldwide. Marketers, particularly those in Europe, should be aware that an enduring—or intensified—war in Ukraine will add further instability to an industry in flux, potentially depressing the size of the market even further.