Royal Bank of Canada, who conducted an in-depth survey of advertising agencies focused on small and medium-sized enterprises, found that overall advertising spending was "beginning to crack", leading to lower target prices for major digital advertising companies, Zhitong Financial APP learned.

"most importantly, we have found a clear 'crack' in overall advertising spending, but the weak advertising spending of small and medium-sized enterprises seems to be far from over, suggesting that the risks facing the digital advertising industry may be more lasting in the second half of this year," said analyst Brad Erickson.

Analysts say that in the short term, advertising spending on the TikTok platform is likely to precede$Alphabet Inc-CL C-A (GOOGL.US) $、$Meta Platforms (META.US) $It has been cut because advertising spending on the TikTok platform currently has little impact on revenue. However, analysts also said that improvements in TikTok's "obvious" advertising platform and scalability are bad for Meta Platforms in the long run.

It is reported that respondents from various advertising agencies pointed out that the growth of e-commerce has generally slowed down. Royal Bank of Canada believes that affected by the COVID-19 epidemic, the growth of e-commerce may remain in single digits not only in a few quarters, but also in several years. Analysts say the survey shows that only 25 per cent of small and medium-sized enterprises have cut spending so far, and there is plenty of room for cuts if inflationary pressures persist.

Analysts pointed out that the other side of the competition brought by TikTok to Meta is that so far, the profit of Meta's short video product Reels shows no real signs of improvement. "this is not good given that Meta is now delaying its plan to charge content creators a commission until 2024 rather than 2023, suggesting that better critical quality of content and participation in Reels must be achieved before earnings can grow better," analysts said.

However, advertising agencies also point to some positive factors, including the low percentage of small and medium-sized enterprises in spending cuts so far (showing some stable business trends), the resilience of key revenue channels, and some IDFA-related algorithm improvements promised by Meta.

Royal Bank of Canada cut the target prices of a number of companies in the field of digital advertising. The bank lowered the target price for Meta from US $240,200 and the target price for Alphabet (GOOGL.US) of Alphabet Inc-CL C's parent company from US $3420 to US $2700.$Amazon.Com Inc (AMZN.US) $The target price will be lowered from 175 US dollars to 144 US dollars.$Pinterest (PINS.US) $The target price was lowered from $26 to $23.