Google’s US advertising revenue will fall for the first time this year as a result of the coronavirus pandemic, according to estimates by eMarketer.
The research company’s latest data shows that net US digital ad revenue for the tech firm, one of the biggest media companies in the world, will decline for the first time since Emarketer began estimating its ad revenue.
However, revenues for Facebook and Amazon, which are less reliant on travel advertising, will continue to grow but at “severely depressed rates” compared with earlier expectations.
The hit to digital advertising caused by tightening ad budgets will bring the total digital ad market to US$134.66 billion this year, up by 1.7%.
By the end of the year, Google’s net US digital advertising revenue will fall by 5.3% to US$39.58 billion, bringing its share of the US digital ad market to 29.4%, down from 31.6% last year.
This is compared to eMarketer’s Q1 2020 forecast, which did not account for a global pandemic, which predicted Google’s US ad revenues would grow 12.9%, although its market share would still shrink slightly.
“Google has been growing its net US ad revenues at a slower rate than the overall digital ad market since 2016, so this year will continue a trend of Google losing digital ad market share in the US,” says Nicole Perrin, eMarketer principal analyst at Insider Intelligence.
Meanwhile, Facebook’s net US digital ad revenues will grow by 4.9% to US$31.43 billion, driven by Instagram’s growth. The social media company’s share of the digital ad market will grow from 22.7% to 23.4% year-over-year.
Amazon’s net US digital ad revenues, boosted by the growth in online shopping, will jump 23.5% in 2020 to US$12.75 billion, with its market share up from 7.8% to 9.5%.
“Google’s net US ad revenues will decline this year primarily because of a sharp pullback in travel advertiser spending, which in the past has been heavily concentrated on Google’s search ad products,” Perrin says.
“Travel has been the hardest-hit industry during the pandemic, with the most extreme spending declines of any industry. Ecommerce-related ad spending has also been dampened to some extent:
"Amazon reportedly pulled its ads from Google search earlier this year as it struggled to meet customer demand for its ecommerce services.”
Google’s US net search ad revenues are expected to fall by 7.2% this year, with its share of the search ad market expected to decline from 61.3% to 58.5% (on a net basis) year-over-year. However, search advertising on Amazon, which isn’t exposed to travel, is still expected to grow “robustly” this year.
“Search still accounts for the vast majority of Google’s net US ad revenues, so even though YouTube will continue to grow this year, it won’t be enough to fully counterbalance the more negative trends in search,” Perrin says.
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