Author: Rob Price
Much of the economic activity in Spain and the entire world has been severely affected – and, in fact, paralyzed – by the spread of the coronavirus. Many international companies have lost clients, fired staff, or have been forced to close.
But not Facebook.
The social network (United States) seems to be about to emerge from the pandemic in an increasingly strong position. Right now, the economic crisis reinforces its dominance, helps to rehabilitate its image and accelerates the market trends that work in its favor.
Proof of this are their first quarter financial results 2020, the period in which the coronavirus crisis began to affect.
Unsurprisingly, Facebook’s advertising business took a hard hit, but it still did better than Wall Street anticipated, so its shares of the organization rose 10%.
And, in the first weeks of April, when the impact of the pandemic and the closure worldwide has been more rigorous, Facebook has said that its income is approximately at the same level as on the same date last year.
Obviously, revenue slows significantly from Facebook’s typical double-digit growth, but it’s a sign that the foundation of the business remains healthy.
The future is darker than ever, and could change a lot in the coming months. But for now, both in the short and long term, as well as financially and at the reputation level, Facebook has positioned itself to do well.
Advertisers turn to ad formats that deliver tangible results
In the midst of the crisis, advertisers are focusing on advertising campaigns and formats that deliver direct, tangible results, and further away from recruitment efforts broader, according to Facebook executives in a call with some analysts on Wednesday.
For the Facebook business so far, that has meant better performance in verticals like gaming (where ad success can be easily measured: was the game installed?), Over others like the automotive industry (where an advertiser could try to boost your company’s reputation less in less tangible ways).
It’s a trend that will benefit the company, which can promise scared and crisis-affected advertisers incredibly accurate tools to target small segments of the population and track the success of their ads.
Those who still intend to invest in advertising will most likely turn to Facebook and Similar platforms like Google in the coming weeks and months; while they stop investing in other spaces that do not offer this functionality – such as the media, which is already reporting a hard hit in advertising revenue that has caused layoffs across the industry.
The new coronavirus could be miraculous for Facebook’s reputation
Since 2016, the company has been denounced for scandals, from Cambridge Analytica’s misappropriation of tens of millions of user data to the role of the social network in spreading the hate speech that fueled the genocide in Myanmar.
But now, the new coronavirus could help regain the tech’s reputation.
With millions of people confined around the world, a record number of these turn to the company’s applications and services to keep in touch with their friends and families. And, while life finally approaches an appearance of normality (or some “new normal”), that utility that Facebook has offered people can translate into significant goodwill.
The company is also trying to fill as many gaps that have caused the closings in the midst of the pandemic: even the organization of a virtual graduation event full of stars for the Class of 2020 that will be chaired by Oprah in May.
And it is distributing 100 million dollars (almost 92 million euros) in grants to 30,000 small businesses that need help. For some, this injection of money can mean the difference between life and death — so they most likely won’t forget who helped them stay afloat.
Companies are being forced to develop their online presence
Due to closings worldwide, the internet is the only hope of survival for many companies.
“With so many companies forced to close their physical stores, more and more are looking to build their digital presence and those who have already invested in it increasingly see it as their main showcase,” says Mark Zuckerberg, Facebook CEO.
In the short term, Facebook can be a big beneficiary of this, as companies use the free platform to build a long-term presence, and even take out ads to try to attract more customers.
But in the longer term, it also points out that this will help the social network.
In the past decade, the rise of e-commerce and online shopping has defined the retail landscape. With physical stores closed, the pandemic is accelerating the process, not only generating more online business, but forcing more and more people to adopt online shopping to meet their needs.
For years, Facebook has been quietly investing in shopping tools, most notably on Instagram.
Although it is still this functionality it is too premature to give a short-term material boost to the company’s revenue, but it is a clear indicator that the company is well positioned to take advantage of the changes to come in consumer buying habits.
In addition, Facebook seems to be turning in this area, since even Mark Zuckerberg has acknowledged this Wednesday that the company would have more to share on this front in the coming weeks.
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