Twitter withdrawing its earnings guidance was a key event in the story of shrinking advertising dollars, a symptom of the economic sickness of the global pandemic.
It shows that digital platforms will also see advertising earnings fall, as the coronavirus squeezes ad spend, as well as media companies.
Analysts report marketers quickly withdrawing or changing their media plans, meaning a slowing in the flow of advertising dollars at least in the short term and more than likely longer.
In the US, an IAB (Interactive Advertising Bureau) survey shows 70% of buyers have already adjusted or paused their planned ad spend.
And almost three-quarters (74%) say the current advertising downturn will be worse than the GFC in 2008-9.
The results of a similar survey by IAB Australia are due this week.
An article in Barron’s, titled Google and Facebook Can’t Save the Advertising Industry This Time, argues that technology won't be the saviour of the ad spend universe .
“This is an equal-opportunity problem across print, TV, digital, radio, and outdoor advertising,” says the US-based financial magazine, part of Dow Jones, a News Corp company.
“Advertisers are quickly slashing or pulling budgets, canceling or reducing campaigns, zapping billions in ad dollars from media income statements, and endangering the future of media businesses regardless of form.
“The reason is simple: Even the most prominent ad buyers lack reasons, and often the means, to buy ads. Global travel is on hold; for airlines, hoteliers, cruise lines, casino operators, and car-rental firms, there are no products to promote.“
Twitter was in February expecting revenue to grow between 4.8% and 12.5% in the first quarter of 2020.
But now the company sees revenue down due to the global economic environment the virus has created and its effect on advertiser demand.
“What Twitter’s updated guidance means for the broader digital ad market depends on how much of the social platform's decline is due to shrinking ad budgets and dollars disappearing from digital entirely,” say analysts at eMarketer.
“It also depends on how much is due to a shift in spend away from Twitter and toward other digital channels that are viewed as more essential.”
Google so far hasn't said a lot but every publisher and digital platform faces the same situation.
Facebook says: “We’ve seen a weakening in our ads business in countries taking aggressive actions to reduce the spread of COVID-19.”
In Australia, the string of earnings guidance withdrawals includes Nine, Seven West Media and oOh!media.
WPP AUNZ cancelled dividend payouts to shareholders.
And those working in advertising and media find themselves working from home and on reduced hours as companies hoard as much cash as possible to carry them through lean times ahead.
This is happening at a time when premium news sites are gathering record audiences, as people seek reliable and accurate information on the impact of the coronavirus in their communities.
However, these publishers say many advertisers are blocking display of their ads against keywords associated with the pandemic.
In Australia, the ad slump has prompted calls to urgently conclude a deal between premium publishers and digital platforms, as mandated by competition watchdog, the ACCC.
ACCC chair Rod Sims says publishers have been hit by a double blow, first the digital platforms and then the pandemic.
“Our media companies are in great difficulty, so that bargaining code that we’re facilitating between the media companies and the platforms is just all that more urgent,” he told ABC radio.
Michael Miller, executive chair in Australasia of News Corp, announcing the suspension of print editions of community newspapers in four states, says the COVID-19 did not create the crisis, but it brought it to a head.
The Australian government must force digital platforms to pay for the content they profit from, he says.
“Digital media is not a level playing field: we are forced to fight digitally with one hand behind our back and this is the fundamental issue that must be addressed,” he says.
“These platforms, unlike us, have no commitment to local communities.
“They employ no journalists, create no content, face almost no regulation, and pay (virtually) no tax while they make unheard of profits by taking other people’s content.”
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