Many of the world’s largest social media companies face an uncertain future due to declining ad revenues, says GlobalData, a leading data and analytics company.
GlobalData’s latest report, COVID-19 impact on Social Media, reveals that the use of social media has increased significantly during the global lockdown instituted in response to the pandemic. However, overall advertising budgets are likely to fall significantly over the next 12 months, which will harm those companies that derive a significant portion of their revenue from advertising.
Shabnam Pervez, Thematic Analyst at GlobalData, commented: “Advertising budgets are being slashed as a result of COVID-19, which many social media companies rely largely on for their overall revenue. For example, in Q1 2020, 98% of Facebook’s overall revenue was attributed to ad revenues. GlobalData’s Social Media Scorecard, which scores 33 social media companies based on ten key themes, highlighted Facebook and Twitter as some of the giants affected by COVID-19 – seeing a respective score of 2 and 3 for their expected impact from the virus.”
Social media has proven to be an important tool in improving wellbeing for the millions of users around the world that have effectively been quarantined. Keeping connected during the outbreak is vitally important, with research showing that quarantined individuals in contact with their loved ones via social media are less likely to report adverse effects from their isolation.
Pervez continued: “Social media traffic has skyrocketed and has given fake news space to thrive. The World Health Organization (WHO) has labelled the surge of fake news on COVID-19 an infodemic. In response, social media companies are now using their platforms to promote information from non-governmental organizations (NGOs), governments, and specialized agencies, to raise awareness of useful information surrounding COVID-19.
“Many social media platforms are struggling to stem the flow of COVID-19 misinformation and harmful content. As the volume of information that needs to be checked can overwhelm human moderators, artificial intelligence (AI) is being used by social companies including Facebook to ease the pressure of fact-checking. However, there are significant limitations to the use of artificial intelligence (AI). In particular, AI systems struggle to adapt to new threats, and COVID-19 is still a relatively new and evolving source of false information.”