26 MAR 2020
SPECIAL CONTENT

MORE ENGAGEMENT BUT LESS REVENUE IN SOCIAL MEDIA DUE TO COVID-19

Many advertisers have pulled marketing budgets to rein in costs because of the virus-related uncertainty, and others are hesitant to advertise alongside coronavirus discussions for fear of associating their brands with this sensitive topic.

The global coronavirus pandemic not only forced most of the world's population to stay at home, but it also impacted hard on all businesses. In the case of social media, the need to communicate fostered an increase in the number of active users, although the numbers of ad-sales revenues are not as auspicious.

In this new global context, many advertisers have pulled marketing budgets to rein in costs because of the virus-related uncertainty, and others are hesitant to advertise alongside coronavirus discussions for fear of associating their brands with this sensitive topic.

Facebook, for example, admitted that is seeing a weakening in its ads business in countries taking actions to reduce the spread of the Covid-19, despite an increase in engagement on its some of its platforms.

“As the pandemic expands and more people practice physically distancing themselves from one another, this has also meant that many more people are using our apps,”  the company said in a blog post titled “Keeping Our Services Stable and Reliable During the Covid-19 Outbreak”.

The post, which discussed increased usage of its products in areas hard-hit by the outbreak, such as Italy, added further down that the company has “received questions about revenue,” and said that much of the increased traffic is on messaging services. However, Facebook is also seeing people use “feed and stories products” to get updates from other users.

“At the same time, our business is being adversely affected like so many others around the world,” the post reads. “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,”  the company wrote.

Twitter, another social media giant, is facing the same kind of problems. The outbreak of the virus has made the service vital for a broader population than usual, as people look to stay abreast of the latest news from authorities and keep in touch with friends virtually.

“The Covid-19 impact began in Asia, and as it unfolded into a global pandemic, it has impacted Twitter’s advertising revenue globally more significantly in the last few weeks,”  commented Ned Segal, Chief Financial Officer of the company, in a statement. Twitter was the first major ad-supported US platform to disclose the impact of the coronavirus.

Regarding active audience, Twitter said on Monday total monetisable daily active users jumped 23% to 164 million quarter-to-date, driven by the conversation around Covid-19, as well as ongoing product improvements.