Google, Facebook, Twitter gain plenty of users amid covid but lose major ad revenue
02 May, 2020
Google, Facebook and Twitter have faced an enormous drop in advertising revenues as the pandemic halted the functioning of most types of businesses, except the delivery of essential goods.
The finance head of Google’s parent company Alphabet Ruth Porat said that revenues have been on the right track to beat expectations in the first 8 weeks of the quarter, and they plummeted in March, when the lockdowns began
While Google products are in greater demand, such as for example Google Meet for videoconferencing, YouTube for entertainment, Maps to find near by businesses selling essentials, Stadia for games, & most importantly Google’s Cloud Computing Services, ads dropped as people could no more travel or purchase non-essential products.
YouTube income jumped 33 percent to $4 billion for the quarter, and Google’s cloud computing division raised a lot more than 55 percent to $2.8 billion, and Google’s “other revenues”, namely YouTube music and pay-TV services and Pixel and other hardware sales jumped 22 percent to $4.4 billion.
Alphabet earned a total of $6.8 billion in profit on sales of $41.2 billion this quarter. But while earnings is up 13 percent, net income is up by just 1.5 percent, mainly as a result of fall in advertising that is a huge revenue earner..
Meanwhile, fun fact, Google only commenced declaring its YouTube and Google Cloud revenues for the first ever amount of time in February following the US Securities and Exchange Commission demanded more transparency.
Preparing for less earnings than expected in the upcoming quarter, Alphabet has announced hiring freezes and cost-cutting especially on marketing.
Facebook is a facing a similar problem. Ads constitute the majority of Facebook earnings but ad earnings was “flat when compared to same period this past year”. Nevertheless the social media company reported profit of $4.9 billion on revenue that grew 17 percent to $17.4 billion through the first three months of the year.
Facebook too notched up more users since the pandemic locked up people within their homes. Its monthly active users grew ten percent to 2.6 billion while Instagram and WhatsApp users neared three billion.
Ad spending is likely to improve a little as countries prepare to exit lockdown in phases. But costs are set to go up.
While it has created what it calls a “journalism relief fund” to pay some money to news organisations hurting from the monetary slump, there is demand from governments in Australia, France and Spain for Facebook as a news aggregator to pay news publishers for content that's shared across the platform.
Although Facebook still posted profits despite growth slowing in comparison to its targets, the other popular social networking Twitter posted a loss in the past quarter. Falling advertising earnings was the key cause. A big proportion of ads on Twitter originated from sporting events, all of which were cancelled because the coronavirus became a pandemic.
A bright spot amid the grim quarter for Twitter is that its user base jumped 24 percent by 14 million new users, with the full total number of daily active users on the micro-blogging platform standing at 166 million.
While earnings went up by a marginal 3 percent, Twitter posted a lack of $8.4 million as ad revenues plummeted 27 percent weighed against this past year between March 11 and 27.
Advertising generally on all three tech-enabled platforms, Google, Facebook and Twitter are expected to slowly come back as restrictions on travel start to ease in the coming months.
But all three platforms are also buying battling misinformation, hoaxes and scams especially linked to the coronavirus, which is increasing costs.
However, with tech-enabled services and social networking becoming all important in a socially-distanced world, Google, Facebook and Twitter are expected to bounce back within a couple of months. Besides, in comparison to major non-tech-enabled companies that contain been devastated in the past quarter, you can say that the trio are thriving.
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