So Q2 2020 is over, and the major Social Media Platforms are all, without question, experiencing a surge in users being online, using social media, and social distancing. Will the tried & true model of “more users equating to more revenue” crack under the pressure.
If content is still king and the audience is ever present, why aren't tech giants growing?
GDP jumped out of a plane, declining at an annualized rate of 33% between April and June 2020, companies reduced ad spend in general, and according to some forecasts, that spend will be decreased by 25% this year alone. While the impact will be felt up and down our economy, with the largest ripples hitting small companies reliant on ad spend or small local newspapers, Big Tech is not immune.
So, let’s see what’s happening to the big 4:
- Facebook defied expectations by 11%. While that’s great during a pandemic, it has slowed down from its quarterly average growth of 25%. The political environment and the ad controversy will impact their Q3, so keep your eyes peeled!
- Snap favored positively and sales grew by 17%, while they saw a decline in user growth. Q1, their growth rate was an incredible 44%, so the impact from the pandemic is very felt.
- Google had it’s 1st decline in sales EVER. Let that sink in… Google was founded on September 4, 1998, the year I graduated high school (Raj did). In nearly 22 years of operation, Q2 2020 was their first decline in sales. Google makes 70% of its revenue from ads, and they themselves cut their marketing spend by nearly 50%.
- Twitter sales declined by nearly 23%, even though they saw an amazing 34% growth in their daily active users. More people to show ads to; but still decline in sales, makes sense why they are exploring a subscription model to augment/supplement the decline in their top line.
So, we’re seeing more engagement than ever, which is natural since we all find ourselves with so much more time. While we would think users translates to profits, Big Tech has not been able to capitalize on this increased user base due to the drop in ad spend. Let’s see what the crystal ball holds for Q3. Some still predict growth in ad sales for Q3, even in the face of a boycott.
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