Coronavirus: Facebook Admits Covid-19 Is Hurting Advertising Sales

Facebook has admitted that coronavirus is hitting advertising sales, which is the main revenue generator for the social networking giant.

The admission comes despite the fact that people are spending more and more time on the platform, due to the lock-down in many countries now due to the Covid-19 pandemic.

On Monday Facebook said it will temporarily lower the video streaming quality in Europe to ease any bandwidth strain on networks. It then downgraded the video quality on its platform and Instagram for users in South America.

Advertising impact

But the admission from Facebook that advertising sales are being impacted by Coronavirus, has had a sobering affect on Wall Street.

“We don’t monetise many of the services where we’re seeing increased engagement, and we’ve seen a weakening in our ads business in countries taking aggressive actions to reduce the spread of Covid-19,” Facebook was quoted by Reuters as saying in a statement.

This admission triggered a 1 percent fall in Facebook shares in after hours trading, Reuters reported.

But Facebook also admitted that the Coronavirus lock-down is stretching it to the limit.

In a call with reporters, CEO Mark Zuckerberg reportedly said last week that Facebook’s services are facing “big surges” in usage as the coronavirus forces millions around the world to stay home.

He described the increase in demand as “well beyond” the main annual spike usually seen on New Year’s Eve. Voice and video calls on WhatsApp and Facebook Messenger, in particular, are more than double usual levels.

Heavy usage

And this message about heavy usage was made again this week, after Facebook reportedly said that messaging across its platforms had increased more than 50 percent over the last month in many of the worst affected countries.

In Italy specifically, users have been spending 70 percent more time in its apps.

Group calling with three or more participants increased by over 1,000 percent in Italy in the last month, Reuters reported Facebook as saying.

Reuters said that Facebook declined a request for comment on precisely which of its markets were experiencing adverse business impact, or the magnitude of that impact.

There are reports that many advertisers have pulled marketing budgets to rein in costs because of virus-related uncertainty.

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