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Tech giants set to lose billions in ad revenue in virus shutdown – Axios

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Illustration: A√Įda Amer/Axios
Tech giants like Google, Facebook and others are expected to lose billions of advertising dollars this year thanks to economic disruptions caused by the coronavirus pandemic, analysts say.
Why it matters: The losses aren't expected to cripple these companies, but they will put a dent in the otherwise unprecedented growth that several have experienced for the past few years.
Driving the news: All advertising-based businesses face risk from the coronavirus, but those that depend on self-service advertising dollars from small businesses, which are mostly shut down for now, will be particularly affected in the short term.
Be smart: Advertising on social media and search, which is how the dominant tech platforms make their money, is expected to take a big hit in the short term for two reasons:
By the numbers: Analysts at Cowen & Co., an investment management and banking company, estimate that Google and Facebook combined will lose over $40 billion in ad revenue this year due to the virus. They predict the following losses:
Be smart: Global advertising revenue tends to grow at roughly the same rate as GDP, so any global economic slowdown is likely to depress the advertising market.
The companies have mostly been forthcoming with investors about the expected losses.
Yes, but: Analysts don't think that companies like Google and Facebook will come out of this crisis much weakened, even with severe advertising losses, because their balance sheets are otherwise pretty healthy.
The big picture: Due to the impact of the coronavirus on the economy, analysts expect overall ad revenue to be down roughly 4.4% for 2020, barring cyclical events like the election.
What's next: Growth in the ad market, and particularly in the digital ad market dominated by companies like Facebook, Google, Twitter and Snapchat, is expected to come back strong in 2021.
Photo illustration: Sarah Grillo/Axios. Photo: Porter Gifford/Corbis via Getty Images
Welcome to a special edition of Axios AM that looks at the lasting impact of the Sept. 11 attacks and what we can expect in the coming years. It's led by Dave Lawler, author of the Axios World newsletter, with contributions from expert reporters across the Axios newsroom.
Photo: Sarah Silbiger via Getty Images
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