Google will reportedly see a 5.3% drop in its digital ad revenue in the United States for the year 2020, according to multiple media reports such as CNBC, Wall Street Journal and Adweek. Citing a report from market research company eMarketer, it is forecasted that Google will earn US$39.58 billion in advertising revenue this year, compared to US$41.80 billion in 2019. Besides the dip in ad revenue, eMarketer also expects a 7.2% drop in search ad revenue. That said, Google's revenue is predicted to grow in the next two years, achieving a US$47.85 billion revenue in 2021, and US$53.47 in 2022.
On the other hand, eMarketer forecasted Google's ad spend rivals Facebook and Amazon to fare better this year, with growth of 4.9%, and 23.5% respectively. The prediction comes even though Facebook reported a "significant reduction" in demand for advertising, as well as a related decline in the pricing of its ads, over the last three weeks of the first quarter of 2020.
During that period, Facebook made US$17.7 billion in revenue, with US$17.4 billion coming from digital advertising. That said, the company previously reported a 27% increase in its advertising revenue for the full year of 2019, reaching US$69,655 million, according to its financial report. Meanwhile, eMarketer said that Amazon amassed an ad revenue of US$10.32 billion last year and is expected to grow to US$12.75 billion in 2020.
Google's latest financials showed that its YouTube ads raked in US$4.04 billion in revenue compared to US$3.03 billion during the same period in 2019, while Google Advertising saw a revenue of US33.76 billion compared to US$30.59 billion last year. Previously, Alphabet CEO Sundar Pichai said the first two months of 2020 were strong for its advertising business. However, the company experienced "a significant and sudden slowdown" in ad revenues in March, correlated to the locations and sectors impacted by COVID-19 and related shutdown orders. Google also delayed some ad launches and prioritised supporting its customers as many adjusted their strategies, Pichai said, adding that recovery in ad spend will depend on a return to economic activity.
In June 2019, an analytical study by Juniper Research titled “Future Digital Advertising: Artificial Intelligence and Advertising Fraud 2019-2023” predicted that global digital advertising spend will reach US$520 billion by 2023, and that Amazon's rising digital ad revenues will disrupt the Google and Facebook’s duopoly. Its research forecasted average annual growth of 15% on digital ad spend over the next five years, driven by the use of AI-based programmatic advertising to deliver highly targeted ads.
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