Wednesday, March 25, 2020

Facebook Usage Soars, Ads Plunge

Facebook Inc. said usage of its products was skyrocketing because of the coronavirus pandemic but warned that increased activity wouldn’t shield the company from the online-advertising pullback roiling Silicon Valley and Madison Avenue alike, The Wall Street Journal reports.

In a post on Tuesday afternoon, Facebook said total messaging across the platform’s services has increased 50% in countries hit hard by the virus, with video messaging more than doubling. In Italy, which has undertaken some of the strictest restrictions on public life of any country outside China, group video calling is up by more than 1000% from a month ago and usage of all Facebook apps is up 70%.

Facebook also owns Instagram as well as the popular messaging service WhatsApp.

The company said the higher usage wouldn’t protect it from expected declines in digital advertising across the globe.

“We don’t monetize many of the services where we’re seeing increased engagement, and we’ve seen a weakening in our ads business in countries taking aggressive actions to reduce the spread of COVID-19,” wrote Alex Schultz, Facebook’s vice president of analytics, and Jay Parikh, vice president of engineering.

The company didn’t provide official earnings guidance, but the executives said “our business is being adversely affected like so many others around the world.”

Facebook detailed steps the company is taking to increase capacity and reduce the strain that heightened video-calling and calling traffic puts on communications structure. The announcement is in keeping with others by advertising-based tech platforms and media of reduced financial targets.

Twitter Inc. on Monday said its financial performance would fall short this quarter as a result of the pandemic.

Google parent Alphabet Inc. is also in a perilous spot. Alphabet makes almost all of its money from online advertising in areas like search, maps and video, and its biggest clients seem sure to pull back. In one early warning sign, travel conglomerate Booking Holdings Inc.—one of the world’s biggest online advertisers—said Monday it would “dramatically” pare back its marketing costs.

Google has also pinned its future on making more from advertising connected to “real-world” queries, such as turn-by-turn direction searches and as a paid go-between for individuals looking to find local businesses like plumbers. Many consumers, however, are now confined to their homes.

No comments:

Post a Comment