Even Google and Facebook may face Ad slump

Updated: Mar 12, 2021

It is feared that the ongoing financial slump due to the outbreak of Coronavirus will affect business giants like Google and Facebook like never before. Only about a couple of months ago there were plenty of ads running on both sides of your screen but not anymore. Travel and vacation ads, consultation ads, entertainment ads, drop-shipping ads, and almost every kind of ad has vanished from Google and the Facebook This resulted in a major decrease in the prices of Facebook ads. Wall Street analysts are predicting that the annual revenue of both these business giants will also be going down at least for the current year. Apart from this horrifying fact, the good thing is that Google and Facebook are still doing better than many others of their industry. They are expected to recover from the crisis sooner than their competitors. If this is the case, peoples spending will be more directed towards Google and Facebook. As, Nicole Perrin, principal analyst at research firm E-Marketer says, when this is over they will end up in a stronger position than ever before.

The reorganization is starting to shape. The review site for Yelp said that they are laying off a thousand employees and another eleven hundred will be on leave. In an email Jeremy Stoppelman, Yelp chief executive, said they needed to cut the costs in the face of stay home that have affected restaurants, bars and other local businesses, which were the company’s main advertisers. After projecting their revenue increase between 5-11% for the first quarter, Twitter withdrew their quarterly estimates as they now project a slight drop in the revenue. Pinterest also pulls the projection off the current year’s growth as they see a quick decline from last month.

There is a remarkable decline in paid ads on Google. Mark Mahaney an analyst with RBC capital markets ran 50 Google ads searches last month and found no paid ads. So this is the insight of trends across online advertising. According to the advertising analytic platform Pathmatics, companies that were spending on digital ads on a daily basis have declined by more than 20% since March 15. Cirque du Soliel was spending more than $140,000 in a day in late February, about $40,000 in late March and then nothing in April. Big travel companies like Korean Air and Norwegian Cruise line dropped their digital ad spending to almost zero in late March. The home rental company Airbnb suspended all their marketing which was projected near $800 million this year.

However the advertisers who are spending their money are very cautious around coronavirus news. The news of the patients and death toll or economic distress is not advertiser-friendly. Most of the marketers are avoiding pandemic related content. Nancy Smith chief executive of Analytic Partners, an advertising consulting firm says people will not be interested in a shampoo ad while their family members in a hospital.

Before the coronavirus outbreak the real estate firm Coldwell Banker was preparing for a great online ad and TV commercial during the N.C.A.A men’s basketball tournament. When the game was canceled, they also decided to freeze their plans. Coldwell just like many other brands is edging back to Google and Facebook. The company debuted its redesigned version of its campaign and now it will run entirely on Facebook, Instagram and YouTube.

United Airlines has pulled all its advertising for four days and came out with a new message about the waived change fees according to Pathmatics. Ahead of Easter, the ads were placed on Instagram and Facebook to direct their customers to their online ordering site said Chocolatier Godiva. Panera Bread conveyed that they had to buy ads to alert their customers for pickup, delivery and their new grocery services.

Many advertisers are hesitant and trying to avoid coronavirus news alongside their brand advertisements. It allows advertisers to opt-out of coronavirus content.

Google on the other hand has controls to ensure that the advertisers are well aware and are satisfied with the sensitive content regarding tragic infective diseases. It has started a sensitive events policy last month. This will help restrict ads on coronavirus. It had to put a temporary ban on selling masks, also citing a supply shortage for medical professionals. Google is advertising masks on publishers’ websites across the internet. It has ads from hand sanitizer and disinfectant wipes from e-commerce sites offering a wide selection of other items too. Google has removed 50 million such ads by the end of March. Furthermore up to 80 % of the 10 million are flagged with coronavirus daily. Facebook banned the predatory ads for masks and sanitizers and eliminated nearly all masks ads but the efforts seem in vain as the volunteer groups that have banded together in Facebook groups to donate homemade masks to help the professionals.

This is an ongoing battle that Google detection system has to find a way to fight, said Scott Spencer vice president at Google ads business.

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