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Illustration: Aïda Amer/Axios

Tech giants like Google, Facebook and others are expected to lose billions of advertising dollars this year thanks to economic disruptions caused by the coronavirus pandemic, analysts say.

Why it matters: The losses aren't expected to cripple these companies, but they will put a dent in the otherwise unprecedented growth that several have experienced for the past few years.

Driving the news: All advertising-based businesses face risk from the coronavirus, but those that depend on self-service advertising dollars from small businesses, which are mostly shut down for now, will be particularly affected in the short term.

  • "In the first half of the year, digital media vendors will feel the heat," says Vincent Letang, executive vice president and director of global forecasting for Magna Global, the media buying unit of global ad agency IPG. "But I still think they will recover more strongly than traditional media in the second half."

Be smart: Advertising on social media and search, which is how the dominant tech platforms make their money, is expected to take a big hit in the short term for two reasons:

  1. They are self-serve, meaning anyone can buy those ads through an automated platform at any time without a prepared contract. As a result, unlike with TV ad contracts, there are no cancellation policies that brands have to adhere to when pulling the plug.
  2. Those ads are mostly purchased by small businesses that are shut down. "Hundreds of thousands of small businesses who probably count for 70% of social and search, they will stop advertising for weeks as they are closed," says Letang. "For some of them, it will be hard to come back, as many won't have liquidity to start marketing."

By the numbers: Analysts at Cowen & Co., an investment management and banking company, estimate that Google and Facebook combined will lose over $40 billion in ad revenue this year due to the virus. They predict the following losses:

  • Facebook: roughly $15.7 billion, 18.8% down from its original estimate.
  • Google: roughly $28.6 billion, 18.3% below estimate.
  • Twitter: roughly $701 million, 17.9% below estimate.
  • Snapchat: roughly $709 million, 30% below estimate.

Be smart: Global advertising revenue tends to grow at roughly the same rate as GDP, so any global economic slowdown is likely to depress the advertising market.

  • Big tech giants are expected to take the brunt of that loss, as they are the biggest entities in the global ad economy.

The companies have mostly been forthcoming with investors about the expected losses.

  • Facebook said Tuesday that it's seen a weakening in its ads business in countries taking aggressive actions to reduce the spread of COVID-19.
  • Twitter said Monday that it had withdrawn its revenue guidance for the quarter "due to the growing impact of COVID-19 on the global operating and economic environment and their effect on advertiser demand."

Yes, but: Analysts don't think that companies like Google and Facebook will come out of this crisis much weakened, even with severe advertising losses, because their balance sheets are otherwise pretty healthy.

Reproduced from MAGNA; Table: Axios Visuals

The big picture: Due to the impact of the coronavirus on the economy, analysts expect overall ad revenue to be down roughly 4.4% for 2020, barring cyclical events like the election.

  • Traditional media advertising, like TV and print, on a full year basis will go down by about 15% if you exclude cyclical events. But digital media advertising will grow slightly, by about 3.5%.

What's next: Growth in the ad market, and particularly in the digital ad market dominated by companies like Facebook, Google, Twitter and Snapchat, is expected to come back strong in 2021.

  • Magna predicts 8% growth for digital media in 2021, which is in line with what it originally forecast prior to the coronavirus pandemic.

Go deeper

House sends anti-Asian hate crimes bill to Biden's desk

Asian Coalition of Massachusetts organizer Fiona Phie takes a moment of silence after placing an offering among flowers, candles and incense to honor those who have experienced violent anti-Asian hate crimes. Photo: Erin Clark/The Boston Globe via Getty Images

The House voted 364 to 62 on Tuesday to pass the COVID-19 Hate Crimes Act and send it to President Biden's desk, who has said he will sign the measure into law.

Why it matters: Introduced by Rep. Grace Meng (D-N.Y.), the bill is Congress' first substantial effort to address the rise of anti-Asian hate this past year, which has included stabbings, sexual assault and elder abuse.

Feds investigating alleged scheme to illegally finance Collins’ reelection bid

Sen. Susan Collins. Photo: SARAH SILBIGER / Getty Images

The FBI is investigating what it describes as a massive scheme to illegally finance Sen. Susan Collins' 2020 reelection bid, Axios has learned.

What's happening: A recently unsealed search warrant application shows the FBI believes a Hawaii defense contractor illegally funneled $150,000 to a pro-Collins super PAC and reimbursed family members' donations to Collins' campaign. There's no indication that Collins or her team were aware of any of it.

Mapped: Confederate monuments over time

Data: Southern Poverty Law Center; Note: There are some monuments with unknown dedication dates and they are not represented in the bar chart; Map: Michelle McGhee/Axios