The novel coronavirus (COVID-19) outbreak has affected global industries and it also seems to have impacted the advertising sales of tech giants Facebook and Google.
A large number of users flock to Facebook and Google for information regarding COVID-19 during these times when countries across the globe continue to close their borders.
However, both companies have seen their advertising sales drop with a notable impact.
While the economic slowdown has affected Facebook and Google, both tech companies are still the leading ad sellers for all types of businesses that include retail businesses, automakers, online travel agencies, and restaurants, among others.
How massive the loss is going to be will depend on how long the coronavirus pandemic lasts.
According to some medical experts, this pandemic may last more than a year which in turn could hurt the world’s economic system for a long period of time.
Ad spending decelerates across the globe
Millions of people have self-isolated and several countries are trying to fight the spread of the coronavirus by locking down almost every non-essential business. Everything seems to have stopped as countries continue to find a solution to the pandemic.
Under these circumstances, even more people than usual are turning to social media for information, to keep in touch with friends and family, or just to kill some time. This, in turn, has spiked the amount of digital ad space. However, the demand for these marketing spots has dropped, causing prices to fall significantly.
Before the COVID-19 outbreak, eMarkerter had anticipated ad spending in China be around US$121.13 billion – a growth rate of 10.2%. Instead, the growth rate has dropped to 8.4% – to $113.67 billion – making it China’s slowest growth rate since the company began tracking it in 2011.
Rob Griffin, founder of digital ad consulting firm G5 Futures, noted that traditionally big spenders on Google’s and Facebook’s ad networks have slashed their advertising budgets.
“I’m hearing some big numbers, with ad spending down 30% to 50% across the board,” he said.
He further added that many other marketing firms may reduce their ad spending budgets by as much as 80%, while some may stop altogether as they continue to be adversely affected by the coronavirus pandemic.
COVID-19 pandemic shuts down industries
Almost every industry has been shut down including major sporting events such as the NBA and NFL.
The Summer Olympic Games in Tokyo have also been postponed, which eMarketer cautioned would have a massive impact on ad spending.
It means that the drop in ad revenue would mean billions of dollars of losses to companies like Facebook and Google. Even Twitter saw a slowdown in advertising sales over the past few weeks.
In an interview with Bloomberg, Facebook’s COO Sheryl Sandberg commented on the uncertainty in digital marketing:
“This is not going to be business as usual, and the marketing industry is certainly going to see a real impact. I don’t think anyone knows how big. So we’re going to watch and look.”
Amazon, one of the highest ad spending companies in the market, has also cut back on its digital marketing budget. Marketing agency Tinuiti reported that Amazon has significantly reduced its ad spend on Google.
As the coronavirus continues to spread, digital marketing firms will have to deal with serious losses, and Facebook and Google being the leaders in the market, will experience the same.
Images courtesy of PxHere, Flickr/Modern Event Preparedness