Facebook usage and traffic is soaring, but the company warned business may not be booming. At its core, Facebook (and Google) is still in the advertising business. If small and large businesses are drawing down credit lines and conserving cash, the ad budget is one of the first items that will be cut. Eric Savitz reports for Barron’s:
In the latest indication that the market for digital advertising is struggling in the face of the rapidly spreading coronavirus pandemic, Facebook disclosed in a blog post that the social network has “seen a weakening in our ads business in countries taking aggressive actions to reduce the spread of Covid-19.”
The disclosure on Tuesday by Facebook (ticker: FB) came a day after Twitter (TWTR) dramatically reduced its outlook for the current quarter in the face of a weaker ad market.
Like Twitter, Facebook has seen a spike in the use of some of its services—the company said it has seen record use almost every day. But, “we don’t monetize many of the services where we’re seeing increased engagement.”
In some of the hardest-hit countries, messaging volumes are up more than 50% month-over-month. In the same markets, Facebook said, voice and video calling have more than doubled on Messenger and WhatsApp. Facebook said that to help alleviate potential network congestion, it is “temporarily reducing bit rates for videos on Facebook and Instagram in certain regions.”
