Google’s advertising revenue is expected to drop in 2020 amid pandemics and a lull in international travel, according to a report.
The drop is due in part to Google’s core search product’s reliance on the travel industry, which took a hit after the coronavirus pandemic effectively shut down travel, according to a forecast from eMarketer, The Wall Street Journal reported Monday.
“The biggest single culprit here is the travel industry, which has been both hardest hit by the pandemic generally,” Nicole Perrin, principal analyst at eMarketer, told TheWSJ. (RELATED: ANALYSIS: DOJ Investigators Involved In Antitrust Probe Don’t Appear To Be Scrutinizing Claims Of Bias In Google’s Search)
The company’s gross U.S. advertising revenue will likely decline 4%, while the company’s net revenue will drop by 5%, according to eMarketer.
Google has grown its ad revenue by double-digits in nearly every year of its 20-year history, WSJ reported.
The travel industry has concentrated “spending on Google in the past,” Perrin said. The potential decline in revenue comes as the Department of Justice has pursuing an antitrust investigation into Google’s ad technology and other services.
An illustration picture shows a person posing during a photo session showing the social platform Facebook logo reflected in the pupil of an eye on April 25, 2018, in Paris. (CHRISTOPHE SIMON/AFP via Getty Images)
Expedia CEO Peter Kern said during a May earnings call that the pandemic offered the company the “opportunity of an entire reset,” WSJ reported. Kern warned Expedia investors that Google is using its search function to drive users to its own products, which the executive claims represents a substantial risk to Expedia.
“As we wade back in, we’re able to be more precise, be more constrained, watch and learn and grow into it, and not just dive back in head first and spend back to the levels we were at,” Kern said during the earnings call.
Meanwhile, Facebook and Amazon are growing their ad revenue businesses. Facebook’s ad revenue in 2020 will likely grow by 5% to $31 billion, eMarketer reported, even after the marketing agency revised its estimates downward for the social media giant.
“The factors that have propelled Facebook to be a digital advertising superpower in the first place are the same ones keeping advertisers spending during the pandemic: huge reach, effective targeting at scale and performance ad products that tie spending to results,” eMarketer’s report said.
Facebook is largely inoculated from the ups and downs of the travel industry as it is more reliant on direct-to-consumer retail and gaming, eMarketer noted.
Google declined to comment to the Daily Caller News Foundation on eMarketer’s report.
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