Facebook Warning Shows Threat to Google as Ad Budgets Shrink

Google and other digital advertising companies are seeing revenue growth wither as marketers slash spending ahead of an expected recession triggered by the coronavirus.

The global pandemic and the ensuing slump in economic activity is crushing several industries that have been big buyers of Google and Facebook Inc. ads, including online travel agents, automakers, restaurants and retail.

“I’m hearing some big numbers, with ad spending down 30% to 50% across the board,” said Rob Griffin, founder of digital ad consulting firm G5 Futures. Some marketers will slash budgets by 80% or 90%, while others may stop for a while if they’re in sectors that are particularly hard hit, he added.

Millions of people are sheltering at home and spending more time on social media, video streaming and other online services. That’s increasing the amount of digital ad space, but demand for those marketing spots is weak, so prices are falling.

“The consumption is irrelevant, it’s completely irrelevant,” said Brian Wieser, president of business intelligence for GroupM, the media buying arm of advertising giant WPP Plc. “The total amount of money available is independent of viewership trends.”

Facebook warned on Tuesday that its ad business is weakening in countries that are aggressively fighting the virus. Many of its services are being used more, such as messaging, but they don’t run ads, the company added. The day before, Twitter Inc. said usage has jumped, but global advertising is curbed, forcing the social-media company to slash its sales forecast and project a loss in the current quarter.