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Facebook, Google may lose over $44bn in ad revenue in 2020
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IANS | 26 Mar, 2020
The novel coronavirus pandemic
can wipe out more than $44 billion in global ad revenue for the tech
giants Facebook and Google in 2020 as digital advertising runs dry, a
new report has predicted.
According to global investment bank and
financial services company Cowen & Co., Google's total net revenue
is projected to be about $127.5 billion -- down $28.6 billion.
Facebook's
ad revenue for 2020 is forecast at $67.8 billion -- a decrease of $15.7
billion, Variety reported on Thursday, quoting Cowen's data.
However,
Facebook's advertising business is projected to "bounce back" in 2021,
growing 23 per cent (year-over-year) to $83 billion, said the Cowen
analyst team.
"For full-year 2020, Google will generate $54.3
billion in operating income (43 per cent adjusted EBITDA margin) and
Facebook will pull in $33.7 billion (49 per cent margin)," according to
Cowen's forecast.
In a separate blog post, LightShed analyst Rich
Greenfield said that "digital platforms are feeling the pain soonest,
given the relative ease of pulling ad spend versus mediums such as
television (who are likely to experience far more pain in Q2 than Q1)".
Cowen has cut its full-year revenue forecast for Twitter by 18 per cent.
"Amazon's
ad business, meanwhile, is �generally less exposed' to the downturn
than other large digital platforms because the company's advertising is
mostly related to product searches".
Facebook has admitted that
its ad business has been adversely affected in countries severely hit by
the novel coronavirus while non-business engagement like messaging has
exploded which is affecting its services like Messenger and WhatsApp.
"Our
business is being adversely affected like so many others around the
world. 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,"
said Alex Schultz, VP of Analytics and Jay Parikh, VP of Engineering.
With
one-fifth of the world's population now under lockdown and industries
shutting operations amid global supply chain issues, the new coronavirus
pandemic is set to deliver a sharp and deep economic shock, a new
report has said.
According to analysts at BlackRock Investment
Institute, market moves are reminiscent of the darkest days of the
financial crisis, but they don't think this is a repeat of 2008.
"Stringent
containment and social distancing policies will bring economic activity
to a near standstill, and lead to a sharp contraction in growth for the
second quarter", it said.
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