Though ad sales at the two companies are expected to be down, they are likely to fare better than smaller peers and publishers.

While the economic fallout from the coronavirus is hurting Google’s and Facebook’s ad businesses, what little spending there is will still flow to them.

Credit…Jason Henry for The New York Times

OAKLAND, Calif. — Google’s and Facebook’s advertising businesses, which have roughly tripled in combined size over the last five years, may be headed for a rare stumble as the coronavirus pushes the global economy into a tailspin.

Once-abundant travel and entertainment ads have all but disappeared from Google search. The prices for Facebook advertisements are at record lows. And Wall Street analysts are estimating that annual revenues will decline for the first time in the history of the two companies.

It’s the type of downturn that traditional media has experienced before, but was hard to imagine for the duopoly that accounts for more than half of the spending in online advertising.

And yet as gloomy as the situation may appear for Google and Facebook, the outlook for the rest of the digital advertising industry is even bleaker. What little digital spending there is will still flow to them, leaving smaller social media platforms and publishers out in the cold.

“To the extent that people are still spending, it will be even more concentrated with Google and Facebook,” said Nicole Perrin, principal analyst at research firm eMarketer. “They are likely going to end up in a stronger position after all this is over.”

A shakeout is starting to take shape. The review site Yelp said on Thursday that it was laying off 1,000 employees and furloughing another 1,100. In an email, Jeremy Stoppelman, Yelp’s chief executive, said it needed to cut costs in the face of stay-at-home measures that have hammered restaurants, bars and other local business — the company’s main advertisers.

After projecting revenue to increase between 5 percent and 11 percent in the first quarter, Twitter withdrew its quarterly estimate last month and forecast revenue to decline slightly. Pinterest pulled its projection of full-year revenue growth of more than 30 percent because, it said, it started to see a sharp decline from mid-March. It did not offer updated guidance.

David Rodnitzky, chief executive of ad agency 3Q Digital, said that during lean times advertisers opted for ads that translated most directly into new business. Combining a wealth of information about users with the most visited destinations on the internet, Google and Facebook are safe.

That’s not to say the two companies aren’t heading into a rough patch. In an investor note last month, John Blackledge, an analyst for the investment firm Cowen, trimmed his 2020 revenue forecast for Google and Facebook by nearly 20 percent. He now predicts a decline in annual revenue for both.

The prices of Facebook ads have declined 35 percent to 50 percent on average in recent weeks, said Alex Palmer, an analyst for Gupta Media, a digital marketing agency. Last month, Facebook warned that it was already seeing signs of an early pullback.

“Our business is being adversely affected like so many others,” Alex Schultz and Jay Parikh, two Facebook vice presidents, wrote in a company blog post in March. “We’ve seen a weakening in our ads business in countries taking aggressive actions to reduce the spread of Covid-19.”

Mark Mahaney, an analyst with RBC Capital Markets, ran 50 Google searches last month and found no paid ads for travel and restaurants. “We can’t recall ever NOT seeing a ‘Paid Ad’ under the search term ‘Las Vegas Hotels,’” he wrote. “This is indicative of the broader trends across online advertising.”

Average daily spending on digital ads slumped more than 20 percent in the latter half of March for sports and entertainment businesses, according to the advertising analytics platform Pathmatics. Cirque du Soleil, for example, went from sometimes spending more than $140,000 a day on digital ads in late February to spending less than $40,000 a day in late March and then nothing in early April.

Travel companies like Korean Air and Norwegian Cruise Line dropped their digital ad spending to near zero in mid-March, according to Pathmatics. The home-rental company Airbnb suspended all marketing, cutting back from a projected $800 million this year.

Advertisers that are still spending are tiptoeing around coronavirus news. Articles or posts about death, illness and economic turmoil are not exactly advertiser friendly, and many mainstream marketers are avoiding any pandemic-related content.

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

Before the coronavirus upended its plans, the real estate firm Coldwell Banker was preparing for an advertising blitz online and TV during the N.C.A.A. men’s basketball tournament. When the pandemic forced the cancellation of games, Coldwell Banker put a freeze on its plans and halted spending on ads for terms like “vacation homes.”

But after shutting down advertising, Coldwell, like other brands, is edging back to Google and Facebook. The company debuted a revamped version of its ad campaign on Monday that will run entirely online on Facebook, Instagram and YouTube.

United Airlines pulled nearly all its advertising for four days before returning with a new message about its waived change fees, according to Pathmatics. Ahead of Easter, the chocolatier Godiva said it had placed ads on Google, Instagram and Facebook to direct customers to its online ordering site. Panera Bread said it had bought ads alerting customers to pickup and delivery options, including a new grocery service.

Many advertisers are avoiding coronavirus content on news sites and Facebook feeds. Google said it had controls to ensure that advertisers were comfortable with the content that their brand appeared alongside. It allows advertisers to opt out of coronavirus content as well as sensitive categories like tragedy or infectious diseases. Facebook has a similar feature.

At the same time, Google and Facebook are struggling to strike the right balance in policing problematic ads.

Google said it had started a “sensitive events” policy last month, which restricts ads on coronavirus content. On March 9, it also placed a temporary ban on ads selling masks, citing a supply shortage for medical professionals.

But mask ads served by Google continue to appear on publisher websites across the internet. There are also ads served by Google for hand sanitizer and disinfectant wipes from e-commerce sites offering a wide selection of masks and other items in short supply at significant markups.

Google said that it had taken down 50 million ads as of the end of March, and that up to 80 percent of the 10 million or so bad ads it flagged daily were coronavirus related.

Facebook banned the placement of predatory ads for masks, sanitizer and other personal protective equipment, and it eliminated nearly all mask ads across the social network. But its efforts hampered volunteer groups that have banded together in Facebook groups to donate homemade masks to health care professionals.

“This is a continual battle that goes back and forth with sophisticated entities on the other side who are trying to circumvent Google’s detection system,” said Scott Spencer, a vice president with Google’s ads business.

Daisuke Wakabayashi reported from Oakland, Tiffany Hsu from Hoboken, N.J., and Mike Isaac from San Francisco. Erin Griffith contributed reporting from San Francisco.

 

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  • Updated April 11, 2020

    • When will this end?

      This is a difficult question, because a lot depends on how well the virus is contained. A better question might be: “How will we know when to reopen the country?” In an American Enterprise Institute report, Scott Gottlieb, Caitlin Rivers, Mark B. McClellan, Lauren Silvis and Crystal Watson staked out four goal posts for recovery: Hospitals in the state must be able to safely treat all patients requiring hospitalization, without resorting to crisis standards of care; the state needs to be able to at least test everyone who has symptoms; the state is able to conduct monitoring of confirmed cases and contacts; and there must be a sustained reduction in cases for at least 14 days.

    • What should I do if I feel sick?

      If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.

    • Should I wear a mask?

      The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.

    • How does coronavirus spread?

      It seems to spread very easily from person to person, especially in homes, hospitals and other confined spaces. The pathogen can be carried on tiny respiratory droplets that fall as they are coughed or sneezed out. It may also be transmitted when we touch a contaminated surface and then touch our face.

    • Is there a vaccine yet?

      No. Clinical trials are underway in the United States, China and Europe. But American officials and pharmaceutical executives have said that a vaccine remains at least 12 to 18 months away.

    • What makes this outbreak so different?

      Unlike the flu, there is no known treatment or vaccine, and little is known about this particular virus so far. It seems to be more lethal than the flu, but the numbers are still uncertain. And it hits the elderly and those with underlying conditions — not just those with respiratory diseases — particularly hard.

    • What if somebody in my family gets sick?

      If the family member doesn’t need hospitalization and can be cared for at home, you should help him or her with basic needs and monitor the symptoms, while also keeping as much distance as possible, according to guidelines issued by the C.D.C. If there’s space, the sick family member should stay in a separate room and use a separate bathroom. If masks are available, both the sick person and the caregiver should wear them when the caregiver enters the room. Make sure not to share any dishes or other household items and to regularly clean surfaces like counters, doorknobs, toilets and tables. Don’t forget to wash your hands frequently.

    • Should I stock up on groceries?

      Plan two weeks of meals if possible. But people should not hoard food or supplies. Despite the empty shelves, the supply chain remains strong. And remember to wipe the handle of the grocery cart with a disinfecting wipe and wash your hands as soon as you get home.

    • Should I pull my money from the markets?

      That’s not a good idea. Even if you’re retired, having a balanced portfolio of stocks and bonds so that your money keeps up with inflation, or even grows, makes sense. But retirees may want to think about having enough cash set aside for a year’s worth of living expenses and big payments needed over the next five years.