The coronavirus pandemic has made Twitter more valuable than ever to its users. But that spike in interest isn’t doing anything for Twitter’s ad business, which is in free fall — because of the pandemic.
You can expect to see that story unfolding throughout the media business in the months to come.
Here are the numbers: Twitter’s daily usage has jumped by 23 percent this year as people flock to the service, over and over, to keep track of what’s happening. But the company’s revenue may have dropped by 20 percent in March as advertisers cut back on spending or perhaps stopped spending altogether.
It’s always been obvious that the pandemic would hit media companies, because the pandemic is hitting every part of the economy. And advertising dollars, the thing that sustains many media companies, are often cut first as companies contract in bad times.
On Monday, Twitter told investors it no longer believed in the projections it had provided to them in early February, leading Wall Street analysts to do some back-of-the-envelope math and come up with that estimated 20 percent drop in revenue. So Twitter’s sort-of announcement about its decline reads as an official warning to the rest of the industry about how quickly things have deteriorated.
It’s also a reminder that even though people are spending much more time with social media, news sites, and TV networks, those spikes in traffic and usage aren’t going to help if advertisers aren’t paying to reach those people
Twitter is one of two big media (or at least media-ish) companies to tell Wall Street that the pandemic has already hurt their ad business. The New York Times gave out its own warning earlier this month, noting that ad revenue was going to drop “in the mid-teens” in the first three months of this year, though its subscription business seemed okay.
But you will see many more.
“The implication is that marketers are cutting spend across the board,” RBC analyst Mark Mahaney wrote in a research report Monday night. “Want another datapoint? Type ‘Las Vegas Hotels’ in your Google search bar. We’re seeing zero paid ads. Can’t recall ever seeing that.”