Facebook’s ads business hit by Covid-19 pandemic despite surge in usage
- Many of Facebook’s products, including Messenger and WhatsApp, have seen a spike in traffic as people stay home in regions hit hardest by the virus
- But the services that are booming in popularity during the outbreak are not apps or products where Facebook has robust ad businesses
“Our business is being adversely affected like so many others,” the world’s largest social network wrote in a blog post on Tuesday.
Many of Facebook’s products, including messaging and voice calls through Messenger and WhatsApp, have seen a dramatic increase in traffic as people stay home or remain isolated from friends, family and colleagues.
Messaging has jumped more than 50 per cent “in many of the countries hit hardest by the virus,” Facebook said, adding that voice calls in those regions have more than doubled. In Italy, where the coronavirus has claimed more deaths than any other country, time spent on Facebook products has soared by 70 per cent.
Still, those increases are not going to translate into more advertising dollars. The services that are booming in popularity during the outbreak are not apps or products where Facebook has robust ad businesses, meaning the company isn’t seeing a boost in sales from the surge in use. The company gets more than 98 per cent of its revenue from advertising.
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“We don’t monetise 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,” Facebook wrote.
Usage has been so high that simply keeping the services up and running has been “more challenging than usual,” the Menlo Park, California-based company said.
“Our services were built to withstand spikes during events such as the Olympics or on New Year’s Eve. However, those happen infrequently, and we have plenty of time to prepare for them,” the company’s blog reads. “The usage growth from Covid-19 is unprecedented across the industry, and we are experiencing new records in usage almost every day.”
Twitter took the more concrete step of revising its first-quarter revenue guidance, and tossed out full-year expectations that it had shared with investors in early February.
While Facebook does not give public quarterly revenue forecasts, analysts on average had projected the company would post a 22 per cent jump in sales for the first quarter, to US$18.3 billion, according to a Bloomberg survey.
Facebook shares, which had gained 8.7 per cent in regular New York trading on Tuesday, slipped about 1 per cent in extended trading. The stock is down 22 per cent for the year.
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