Google’s ad revenue is expected to decline by 5% this year due to a “sharp pullback” in investment from the travel industry following the global pandemic.
New research published by eMarketer this week found that Google’s revenue from ads that feature on devices including laptops, mobile phones and tablets will fall year-over-year to $31.8bn.
That number is still very healthy, but the research found that Google’s ad revenue in the US would have soared 12.9% in 2020 if it had not been for the COVID-19 outbreak.
While Google remains the dominant player in the ad space, its digital share in the US is declining each year.
eMarketer principal analyst Nicole Perrin said: “Google has been growing its net US ad revenues at a slower rate than the overall digital ad market since 2016, so this year will continue a trend of Google losing digital ad market share in the US.”
Google’s share will drop from 61.3% in 2019 to 58.5% as Facebook and Amazon increase their respective shares.
Google’s drop-off in revenue this year is largely due to the travel industry pulling back on advertising almost overnight following the outbreak.
The travel industry spends a large portion of its budget on ads in Google search, which meant that revenue took a major hit when the industry was almost entirely shut down globally.
The e-commerce industry is also spending less, primarily due to Amazon removing its ads from Google in early 2020.
eMarketer noted that while Google has a number of different revenue streams and continues to see growth on YouTube, its main source is still search, so gains made elsewhere are unlikely to make up for the drop in ad revenue this year.
Meanwhile, Facebook is gaining market share, but its growth will not exceed 5% despite it logging a 26% increase between 2018 and 2019.
