Facebook is the world's largest social networking platform with over 2 billion users across the world. As the Covid-19 pandemic has taken over the world, people are staying home in quarantine and relying on social networks to keep in touch with loved ones and stay updated with what's happening around. Despite an unprecedented spike in the use of many of its services, Facebook's core source of revenue through advertisement has taken a hit.
The coronavirus pandemic has proven to be quite a challenge for businesses around the world. People are spending more time on social media than ever, especially in regions badly hit by coronavirus but both Facebook and Twitter are not seeing that traffic boosting their revenue.
Facebook's ad business takes a hit
Facebook's ad revenue is fuelled by incoming traffic from its users. Even though the pandemic has brought an unprecedented spike in the usage of many of its services, it is not helping Facebook in terms of revenue. The world's largest social network said it's "more challenging than usual" to simply keep its services running when the usage has been so high.
The reason behind Facebook taking a hit in its ad business despite a spike in usage is due to the services that are popular among users are not monetized. "We don't monetise 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," Facebook wrote in a blog post on Tuesday.
Facebook has noted that:
Total messaging has spiked 50 percent in the last month from the countries that are hit the hardest by coronavirus
Voice and video calls have more than doubled on Messenger and WhatsApp
In Italy alone, group calling has increased by over 1000 percent in the last month and people are spending 70 percent more time on its apps
The challenges
Facebook noted that it is usually prepared well in advance for certain events that bring spikes in usage. For instance, global events like the Olympics or New Year's Eve bring huge spikes, but the company is prepared for it. In the case of Covid-19 pandemic, Facebook is finding it difficult to handle the surges, which is setting new records each day, as its employees are working from home due to the outbreak.
During these challenging times, Facebook said that it is prioritizing certain Covid-19 related features such as its information center on the virus and WHO alerts on WhatsApp. To reduce the load on its services, bit rates on videos are reduced temporarily on Facebook and Instagram in certain regions. The social network is also improving the systems and adding capacity as and when required during these trying times.
