Infographic: Google Could Take Hit On Advertising Revenue, First Time In Its Life
While the world’s largest tech companies have so far been left relatively unscathed by the COVID-19 pandemic, they too aren’t completely immune to the fallout from the crisis, which is currently wreaking havoc on the world economy. While Apple faces demand and supply challenges and Amazon is forced to spend billions to keep its vast logistics network safe amid the coronavirus outbreak, Facebook and Google are experiencing a drop in ad spending, which threatens their revenue base.
According to estimates from eMarketer quoted by the Wall Street Journal, Google could even suffer its first decline in advertising revenue on record this year, due in large part to a sharp decline in travel advertiser spending, which constitutes a significant part of Google’s search advertising revenue. “Travel has been the hardest-hit industry during the pandemic, with the most extreme spending declines of any industry,” said Nicole Perrin, a principal analyst at eMarketer. According to Kantar, travel companies Expedia and Booking.com were both among the top 10 advertisers on Google Search last year, illustrating the importance of the ailing travel sector to Google’s ad sales.
As the following chart shows, Google’s U.S. advertising business has been steadily growing over the past one and a half decades, swelling from just under $7 billion in 2008 to more than $40 billion last year. Even the financial crisis couldn’t break Google’s stride in 2009, when growth temporarily slowed to a crawl. The search giant’s growth streak could now come to an end, however, as eMarketer expects the company’s U.S. ad sales to decline by 5% to $39.6 billion this year.