facebook: Facebook reduces advertising rates by 20% as business slips

Facebook has reportedly cut its advertising rates by almost 20 percent in recent weeks, as advertising spending on its platform has taken a heavy hit due to the COVID-19 pandemic.

According to a Wall Street Journal report, advertising fees on the social media platform have dropped 15-20 percent in March compared to February.

Wpromote, a digital marketing agency that handles $ 130 million in annual advertising on the social media platform, told The Wall Street Journal that "Facebook rates have decreased 25 percent from February to March."

Another marketing company, 4C Insights, which manages $ 350 million in ad spending on tech platforms, said the cost of a Facebook-owned Instagram ad to 1,000 users fell 22 percent over the same period.

As more people log into Facebook from home, the increase in usage has not translated into advertising dollars for the social media giant.

Reportedly, to stop the losses, Facebook is going after advertising budgets that had previously been earmarked for televised sporting events.

According to the report, Facebook is launching its video ads as an ideal place to spend those advertising dollars that would have gone to sponsor sports events.

Facebook in late March admitted that its advertising business has been negatively affected in countries severely affected by the new coronavirus, while non-commercial engagement, such as messaging, has exploded, affecting its services like Messenger and WhatsApp.

"Our business is being negatively affected like many others around the world. We do not monetize many of the services where we see increased engagement, and we have seen a weakening in our advertising business in countries taking aggressive measures to reduce the spread of COVID -19, "said Alex Schultz, vice president of analysis and Jay Parikh, vice president of engineering.

The new coronavirus pandemic may wipe out more than $ 44 billion in global advertising revenue for tech giants Facebook and Google in 2020 as digital advertising runs out.

According to global investment bank and financial services company Cowen & Co, Google's total net income is projected to be approximately $ 127.5 billion, a decrease of $ 28.6 billion.

Facebook ad revenue for 2020 is forecast at $ 67.8 billion, a decrease of $ 15.7 billion.

However, Facebook's advertising business is projected to "recover,quot; in 2021, growing 23 percent (year-over-year) to $ 83 billion, Cowen's team of analysts said.

In a blog post, LightShed analyst Rich Greenfield said, "Digital platforms are feeling the pain sooner, given the relative ease of pulling advertising spend in front of media like television (which is likely to experience much more. pain in Q2 than Q1) ".

Cowen has also lowered his full-year revenue forecast for Twitter by 18 percent.