1 Risk That Might Surprise Alphabet Shareholders
When a company faces economic uncertainty, advertising is often the first expense that gets cut. It is a discretionary spending -- something the business can do without -- and it's the easiest to stop. And the return on advertising is notoriously hard to calculate.
Most who follow Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) understand that its success is highly dependent on companies' willingness to spend on digital ads. They may even know that it's more insulated than many others in the industry. What they probably don't know is how much a downturn is likely to affect the share price.
The advertising industry is much different from a generation ago. Late last year, a report by advertising conglomerate GroupM predicted digital would make up nearly 65% of all ad spending in 2021. The same report went on to estimate that between 80% and 90% of that amount would flow to Alphabet and Meta Platforms (NASDAQ: META). That dominance has been cemented over time.
Source Fool.com
