Tech titans Google, Facebook poised to reap long-term benefits of pandemic shifts - Hindustan Times
close_game
close_game

Tech titans Google, Facebook poised to reap long-term benefits of pandemic shifts

Bloomberg |
May 01, 2021 06:29 PM IST

Both Google and Facebook spoke about how the pandemic has accelerated small businesses’ shifts to the web, using their platforms for e-commerce advertising and sales.

Scads of internet companies saw a boost in user attention -- and the revenue that comes with it -- during pandemic lockdowns that kept people at home and glued to their devices. But only the biggest ones are poised to reap the long-term benefit of changing consumer habits.

Google spent the past quarter serving up more ads from retail and travel companies eager to reach consumers who are starting to spend again.(AP)
Google spent the past quarter serving up more ads from retail and travel companies eager to reach consumers who are starting to spend again.(AP)

In earnings reports this week, Amazon.com Inc., Facebook Inc. and Google detailed the ways people have become more dependent on their offerings since shutdowns and quarantines changed how people shop, work, learn and interact -- saying these trends could drive growth long-term.

Hindustan Times - your fastest source for breaking news! Read now.

Meanwhile, smaller social networks Twitter Inc. and Pinterest Inc. disappointed investors, with the former forecasting revenue that missed estimates and the latter warning that user growth is waning in the U.S. EBay Inc. said sales gains during the outbreak would fade as consumers get vaccinated and stimulus checks run out. The contrast underscored how the already-dominant players are leveraging their strength and size to further entrench their ubiquity.

Amazon added customers for grocery delivery, sold more Alexa speakers, and signed on more businesses to its cloud computing service -- a trend it expects “to continue as we move into the post-pandemic recovery,” Chief Financial Officer Brian Olsavsky said on an investor call. Google pressed its case that Chromebooks are the best tools for virtual school and that YouTube can rival television as personal entertainment -- making it more worthy of advertiser investment.

Both Google and Facebook spoke about how the pandemic has accelerated small businesses’ shifts to the web, using their platforms for e-commerce advertising and sales. Such businesses are “asking us what we can do to help them not just now, but over the long run,” Facebook Chief Operating Officer Sheryl Sandberg said.

Even before the Covid-19 outbreak gave the internet giants new ways to cement their places in consumers’ everyday life, the companies were under scrutiny for potentially anti-competitive behavior. All three have faced Congressional antitrust probes amid concerns they have built empires at the expense of healthy competition and consumer choice. Their results during the pandemic may open up new questions about their potential monopolies -- with in-person retail and entertainment options shuttered, consumers who had fewer choices for spending time and money turned their attention to the convenient, omnipresent tech behemoths.

Where consumers went, product marketers followed. The pandemic’s effects have been most dramatic in digital advertising, particularly campaigns for e-commerce. Sandberg said Facebook’s ad results in the first quarter were buoyed by consumers purchasing more goods online. The social-media company’s average price per ad jumped a whopping 30%, indicating that healthy demand allowed it to charge more for each spot.

Amazon’s “other” revenue, which includes advertising, surged 77% to $6.9 billion, “another indication that the boost to Amazon’s business last year shows no sign of ebbing,” according to Nicole Perrin of researcher EMarketer.

Google spent the past quarter serving up more ads from retail and travel companies eager to reach consumers who are starting to spend again. Ruth Porat, chief financial officer of Google parent Alphabet Inc., said the durability of that trend will depend on the pace of the global coronavirus recovery, but some analysts are more bullish on the internet giant’s prospects to take advantage of a great reopening in subsequent quarters.

Philipp Schindler, Google’s chief business officer, said the company’s “sweet spot” is a blend of online and offline purchases facilitated by products like Search, Maps and YouTube. Google has helped big retailers such as Dick’s Sporting Goods Inc. and arts-and-crafts chain Michaels Cos. fulfill orders with customers looking for curbside pickup options or trying to locate products available near them.

“Trends are likely to continue as the broader economic recovery takes hold throughout 2021 and the ramp in digital adoption trends becomes more permanent,” JMP Securities analyst Ron Josey wrote in a recent note. “We were most impressed with core search advertising results as Google highlighted strength across most advertising categories, with a core focus on retail and that travel is seeing renewed interest among users.”

The internet giants’ advertising and e-commerce revenue streams were immune to some of the problems facing other tech leaders during the pandemic. Apple Inc., also named in the Congressional antitrust investigation, makes most of its money from hardware, meaning it’s more vulnerable to supply chain risks. Company executives this week said it will see a negative $3 billion to $4 billion impact in the June quarter from chip shortages hitting iPads and Macs, two product lines that gained popularity during the pandemic.

Apple has in turn been focusing more on non-hardware revenue, including from the App Store, Apple Music, gaming, cloud storage, technical support, advertising and video. That Services division now brings in more than $50 billion a year in sales.

At a fraction of the size of Facebook, rival social network Twitter has missed out on fully capitalizing on the ad spending bonanza in part because the company sells more promotions meant to help companies improve their brand recognition, as opposed to ads that lead people to directly buy products. With consumers at home on their phones, online shopping became a pastime, as spending shifted from travel and events to groceries, home improvement and more comfortable wardrobes.

Meanwhile, Pinterest and EBay both saw an increase in activity during lockdowns, but cautioned that those gains probably won’t last. “Starting in mid-March, the easing of pandemic restrictions slowed U.S. MAU growth and lowered engagement year over year as people spent less time online,” Pinterest said in a statement. When government stimulus checks run out, EBay expects spending to recede, too.

Facebook also expects that people won’t be as dependent on its apps for entertainment and connection as they get vaccinated and return to in-person activity with friends and family. But the shift back isn’t likely to be at a scale to concern investors.

“I don’t think anything hugely dramatic,” Chief Financial Officer Dave Wehner said on Thursday.

Unlock a world of Benefits with HT! From insightful newsletters to real-time news alerts and a personalized news feed – it's all here, just a click away!- Login Now!
Stay informed on Business News along with Gold Rates Today, India News and other related updates on Hindustan Times Website and APPs
SHARE THIS ARTICLE ON
Share this article
SHARE
Story Saved
Live Score
OPEN APP
Saved Articles
Following
My Reads
Sign out
New Delhi 0C
Friday, March 29, 2024
Start 14 Days Free Trial Subscribe Now
Follow Us On