Facebook and Google’s ad businesses appeared to be unstoppable, tripling over the last five years and accounting for more than half of online advertising expenditure. That long run appears to be over with the coronavirus pandemic and its impact on the global economy. Wall Street is now projecting that annual revenues for the two companies will decline for the first time in their histories, due in part to record low prices for advertising. Even so, prospects are even more dire for the overall digital advertising industry.

The New York Times reports that eMarketer principal analyst Nicole Perrin noted that, “to the extent that people are still spending, it will be even more concentrated with Google and Facebook.” “They are likely going to end up in a stronger position after all this is over,” she said. For others, “a shakeout is starting to take shape.”

Yelp is laying off 1,000 workers and furloughing an additional 1,100, with its chief executive Jeremy Stoppelman stating the company “needed to cut costs in the face of stay-at-home measures” that have led to the closure of restaurants and other local businesses, its main advertisers. Twitter has withdrawn its quarterly estimate, and “Pinterest pulled its projection of full-year revenue growth of more than 30 percent because … it started to see a sharp decline from mid-March.”

At digital ad agency 3Q Digital, chief executive David Rodnitzky stated that, “during lean times advertisers opted for ads that translated most directly into new business.” Although Google and Facebook are on firmer footing, Cowen analyst John Blackledge “trimmed his 2020 revenue forecast for [them] by nearly 20 percent … [and] now predicts a decline in annual revenue for both.”

Gupta Media analyst Alex Palmer reported that, “the prices of Facebook ads have declined 35 percent to 50 percent on average in recent weeks.” In March, Facebook vice presidents Alex Schultz and Jay Parikh already noted that they saw “a weakening in our ads business in countries taking aggressive actions to reduce the spread of COVID-19.”

More recently, RBC Capital Markets analyst Mark Mahaney “ran 50 Google searches last month and found no paid ads for travel and restaurants,” something the group had never encountered before. Pathmatics added that, “average daily spending on digital ads slumped more than 20 percent in the latter half of March for sports and entertainment businesses,” reporting that “Korean Air and Norwegian Cruise Line dropped their digital ad spending to near zero in mid-March.” Another example is Airbnb, which “suspended all marketing, cutting back from a projected $800 million this year.”

“Many brands are being cautious,” said Analytic Partners chief executive Nancy Smith. “People don’t want to see, say, a Pantene ad next to their loved one who is in the hospital.”