Facebook and Twitter see massive usage surges — but their ads can't capitalize on it
Well, this is awkward... We're familiar with the concept that if a product is free, our attention likely is the product. With everyone cooped inside because of coronavirus, virtual communication is more important than ever. So is not going outside. That means way less shopping/spending, and puts ad-reliant social media giants in an awkward situation:
- Facebook: Messaging across FB's apps in the hardest hit countries has surged 50%, while video chatting has more than 2X'd. In Italy alone, group video calling is up 1,000% from a month ago, and FB app usage is up 70% across the board.
- Twitter: Daily usage has jumped a whopping 23% this year thanks to desperately inactive Twitter fingers.
But social media relies on ad sales... While people need social media more than ever, advertisers have never needed it less. Marketers won't waste big marketing bucks on ads if you won't buy their products anyway (no one cares about the new spring eyeshadow palette when all you need is a robe to stay home). So Facebook and Twitter haven't translated the usage surge into ad $$$.
We could face ad-pocalypse 2020... When spending drops during economic downturns, so do ad sales. Twitter revealed its ad sales may have dunked as much as 20% in March. Facebook expects something similar. The bright spot for ad-reliant media companies is that they might retain this larger/more engaged user base when the economy rebounds. But think about the 2 types of companies and their demand for ads:
- Companies that sell essentials (like food/TP) don't need ads right now (you're buying TP no matter what).
- Companies that sell non-essentials don't want ads because their stores are closed.