What is the first expense that most small and medium-businesses slash during a recession?
If you said advertising you are right, after all it’s common sense. It does, however, appear to be a surprise to investors – and perhaps management – in Twitter and, now Facebook, two companies whose entire business model is predicated on the continuity and growth of ad revenue, because one day after Twitter pulled its Q1 2020 guidance lamenting the sharp drop in ad revenue, Facebook has done it too.
After the close on Monday, Facebook said in a blog post that it is seeing a “weakening” in its advertising business for some key geographies as a result of the Covid-19 pandemic.
“Our business is being adversely affected like so many others around the world,” the largest social network wrote in a blog post on Tuesday.
As Bboomberg notes, the company said usage for many of its services, including messaging and voice calls through Messenger and WhatsApp, has increased dramatically. Messaging has jumped more than 50% “in many of the countries hit hardest by the virus,” Facebook said. But the services that are booming in popularity during the outbreak aren’t apps or products where Facebook has robust ad businesses, meaning the company isn’t seeing a boost in revenue from the surge in use.
“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 summarized.
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