Though Twitter’s usage is up, the broader economic environment is likely to have a big impact on advertiser spending.
As the crisis surrounding the COVID-19 coronavirus pandemic deepens and more U.S. states tell residents to stay home, consumers are increasingly flocking to Twitter for updates on the health, political and economic fallout.
Twitter tends to thrives in times of hardship and chaos because of the ways the site allows its millions of users to read and respond to the latest news. But the company’s economic engine is advertising, which is often one of the first items that businesses cut during a financial downturn.
On Monday, Twitter withdrew its revenue and profit forecast for the first quarter as well as its outlook on costs for the full year, citing the potential impact of the spreading coronavirus on advertiser demand. While Twitter didn’t say what types of companies are pulling back, the company is preparing the market for a potential steep drop-off, and investors will be paying close attention in the coming days and weeks for commentary from Google, Facebook, Snap and Pinterest.
Across California, New York and other states, restaurants and hotels have closed or drastically reduced their operations. Airlines are reportedly considering a voluntary shutdown, events and concerts have been canceled and retailers have shut their stores and moved all commerce online. Across the board, mass job losses are on the way, with Bank of America forecasting a total of 3 million weekly jobless claims when the number is released on Thursday.
The postponement of the Tokyo Summer Olympics will lead to a massive hit on ad spending. Comcast’s NBCUniversal, which announced a partnership last summer with Twitter for the 2020 Olympics, said earlier this month it has sold more than $1.25 billion in national advertising for the games, a new record.
In the U.S. digital ad market, which eMarketer had expected to top $150 billion this year, the retail sector is the biggest spender. Travel was expected to surpass consumer packaged goods this year as the No. 4 market for digital ads, with entertainment coming in ninth.