Let’s talk about the cuts that are being made in tech and media, as of late. This year has been absolutely brutal for companies that had a strong reliance on advertising. During the height of the pandemic, companies like Meta, Snap, and Twitter were reaping the benefits of people staying home, spending more time online, and getting that extra stimulus check to boost the economy. Fast forward to 2022 and supply chain issues in addition to record inflation have all but halted that trend. With more and more competition, the slices of a user’s attention span keep getting smaller and smaller.
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It started for the big tech companies based on poor earnings reports, seeing the economic slowdowns keeping the companies from reaching their expected EPS and revenue numbers to be higher. Here are some of the notable tech cuts that we’ve seen this year:
- Snap cut 20% of its staff following a weak Q2 earnings report where it showed that its lost 80% of its market value
- Prior to Elon Musk’s acquisition of Twitter, it was expected that he would cut 75% of the staff. Shortly after taking over, he cut 50% of the staff, then 80% of outside contractors.
- Facebook parent Meta cut 13% of its workforce, which is roughly 11,000 employees, just this month.
- Amazon started making cuts of up to 10,000 corporate workers this week and states that layoffs will continue into 2023
Some see these as general cost-cutting measures, but others, like Peter Kafka, think that, while these are cost-cutting measures, they’re also a more gleaning cultural reset that’s needed in Silicon Valley.
So how does this equate to the cuts taking place in media? A lot of the same economic headwinds that technology companies with ad-revenue face are seen by media companies. As said at the beginning, we’re all vying for attention. Some of the more prominent media brands in the world are facing difficult economic times. However, there are some differences. Albeit advertising has slowed down, the competition for subscription dollars has drastically increased. Although Netflix just launched a lower-tiered, ad-supported subscription, it’s still a monthly cost with advertising embedded. But, even Netflix has announced cuts this year. Here are some of the notable media cuts from this year:
The Recount announced cuts while looking for a potential buyer citing an uncertain digital advertising downturn.
Gannett laid off roughly 3% of its workforce, or 400 employees, and completely cut those jobs.
Recurrent Ventures eliminated 52 employees affecting editorial departments across multiple publications.
CNN’s new CEO, Chris Licht, says that staff who are not involved with the core product will most likely be laid off, with the expected announcement of who will be laid off set for early December. This comes on the heels of the short-lived CNN+ streaming service that was live for less than a week before it was shuttered.
Netflix laid off 30 employees from its animation team, earlier this year.
Future, even with a strong H2 in revenue, announced editorial cuts across multiple publications.
Warner Bros Discovery, one of the most notable companies, cut roughly 30% of its ad sales team across the merged companies.
Vice Media cut around a dozen editorial and news staff, earlier this month.
Just yesterday, Outside Inc. cut 12% of its staff.
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I could go on and on about the cuts made this year, and what’s planned for 2023. The bigger issue is how to stave off the impending changes across the attention landscape. Entrants like TikTok are continuing to gain traction and take market share away from all of the above-noted companies. And, they’re taking notice. Yesterday, the Hustle reported that TikTok is looking to take advantage of all of the layoffs from the Silicon Valley giants. While the other companies are seeing ad declines, TikTok is forecasting growth from around $4B to $10B just this year.
The big takeaway is that tech and media companies alike are having to be very careful about their spending going into 2023. Even worse is that their economic projections are rocky at best, not knowing how, or if, the advertising market will turn around.
I’ve launched the new Chat feature in the Overwrite Media Substack. Let’s talk about this. I’d be interested to hear the feedback that you are all getting around economic downturns and what to expect for 2023.
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