In a tough year for the global economy, including recessions, the advertising sector has been impacted negatively. Google has forecast that it will see a 7% drop in paid-search revenue. This is the first-ever contraction in digital ad revenue for Google.
The report by eMarketer’s digital ad forecast for this year has highlighted that Google’s net U.S. ad revenue has been on the decline and at the end of this year will have declined by 5.3%. This revised ad forecast differs from its previous report (pre-pandemic), which saw a 13% growth for Google.
Although Google’s ad growth is on the decline, these reports stated that Facebook and Amazon will still grow at slower rates. The statistics have been released by the eMarketer U.S. revenue projections since showing that the COvid 19 Pandemic saw…
- Amazon’s revenue growth projected at $12.75b.
- Facebook’s revenue growth projected at $31.43b.
- Google’s revenue decline projected at $39.58b.
Although the decline may suggest that Google is struggling, the U.S. digital ad revenues are forecast to grow by 1.7%. The effect on Google indicates a minimal impact in the long term.
Why The Decline?
A large portion of the decline has been directly attributed to travel as spending is on the decline. The effects of COVID-19 on travel has led to the overall decline in spending from the travel industry. This has had a negative impact on Google’s advertising business and travel ad spending has decreased by an estimated 90% in March. This is contrasting with the effects on Google’s competitors. For example, Amazon has captured additional paid-search shares from Google, contributing to the drop. As the statistics suggest, Amazon and Facebook’s revenues are growing.
What Does This Mean For The Future Of Digital Ads?
Although Google’s digital ad revenue has declined; its competitors are still experiencing growth. The statistics suggest that digital ad revenues are still growing long term. However, they will be slow to grow in the near term due to the economic effect of COVID-19.
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