Facebook says ads revenue is weakening due to COVID-19 outbreak

A surge in usage does not always bring more 'advertisement money' for Facebook.

Facebook said it had seen its ads business weakening with the outbreak of COVID-19 coronavirus, which accounts for nearly all of its revenue, despite more people are using its social platforms during the lockdown. The services which are seeing a surge, like a group video call, do not produce much ads revenue. Facebook shares fall by 1% regardless of the 9% rise in the regular trade.

As the viral pandemic expands, the use in social media has dramatically increased, especially in the countries where people are practicing social distancing. Facebook is also trying to keep its services stable and reliable during the COVID-19 outbreak. The company shared a brief data in its official blog post that how this pandemic has affected its services. 

The social giant said that despite increased traffic happening on its messaging services, feed and stories, its business is being ‘adversely affected.’ “We don’t monetize many of the services where we see increased engagement, and we’ve seen a weakening in our ads business in countries taking aggressive actions to reduce the spread of COVID-19,” said Alex Schultz, VP of Analytics at Facebook in its official blog post

We [Facebook]don’t monetize many of the services where we’re seeing increased engagement

Facebook Inc also gave a context on the load it is managing during the pandemic lockdown period. The company said with the pandemic crisis, specifically in Italy, they experienced up to 70% more time spent on across all of its apps, including Instagram and Whatsapp. According to CNBC, in places hit hardest by the virus Facebook seeing a weakening in its ads business despite an increase in engagement on its some of its platforms.

Facebook apps group call time increased graph italy coronavirus covid-19
Image: Facebook

People are doing more live sessions on Instagram and Facebook. Messaging and group calling (with three or more people) also seen increased by 50% and 1,000% respectively since the last month. 

Facebook messaging in many other countries, where the coronavirus has badly hit, has also increased by more than 50%. The voice and video calling also doubled on Messenger and WhatsApp.

However, many of the services, like messaging and video calling, that Facebook is providing are not the real revenue booster of the company. That means the company is not seeing a boost in revenue with the gush in its use.

Twitter ads revenue is slowing down too amid COVID-19

A day before Facebook’s announcement, Twitter also withdrew its revenue and profit forecast due to the impact of coronavirus spread. The forecast cites a cut down on Twitter’s advertiser demand. Like Facebook, the use of Twitter is also seeing surge but variably the pandemic badly impacting its revenue too. Twitter described this financial impact of an epidemic as “rapidly evolving and difficult to measure.” Many large events, which Twitter was expecting will invest in ads, are canceled and companies have lowered their ad budget.

Facebook continues doing everything to keep the social network fast, stable, and reliable with its services. With that, the social network is experiencing new records in usage every day. Facebook feels this unprecedented growth more challenging as many of its workers are working from home. 

However, the company aims to run its apps smoothly, besides giving the COVID-19 updates on Facebook and health alerts on Whatsapp. Facebook is hopeful that its efforts in connecting people will help in keeping them stay at home until the pandemic crisis end. 

READ: Facebook blocked some posts about coronavirus
READ: Facebook, Google Could Lose Over $44 Billion in Ad Revenue in 2020 Because of Coronavirus ‚Üó
READ: Twitter introduces Fleets, Snapchat like self-deleting Stories

Featured image: Getty

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