Facebook Warns Global Coronavirus Spread "Weakening" Online Ad Demand

Courtesy of REUTERS/ Leah Millis
Facebook CEO Mark Zuckerberg

The red flag from the social media giant, led by CEO Mark Zuckerberg, follows Twitter on Monday retracting its revenue forecasts over ad budget concerns.

In another ominous sign for online ads amid the coronavirus outbreak, Facebook on Tuesday warned the global battle against the coronavirus outbreak has impacted advertising budgets.

"We don’t monetize 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," Alex Schultz, vp analytics, and Jay Parikh, vp engineering, said in an update via the Facebook website.

Flagging reduced online ads at Facebook follows Twitter a day earlier warning that, though its own usage was up, the pandemic had "impacted Twitter’s advertising revenue globally more significantly in the last few weeks." Twitter as a result withdrew its revenue and operating income forecasts for the first quarter of 2020.

The Facebook blog post reported countries hit hardest by the virus have seen Facebook messaging jump by 50 percent over the last month as users get updates from family and friends. At the same time, Facebook has seen its business "adversely affected" like elsewhere in the global economy, even as usage growth spikes.

"We’re monitoring usage patterns carefully, making our systems more efficient, and adding capacity as required," the Facebook blog stated. "To help alleviate potential network congestion, we are temporarily reducing bit rates for videos on Facebook and Instagram in certain regions. Lastly, we’re conducting testing and further preparing so we can quickly respond to any problems that might arise with our services."