As the battle against the coronavirus pandemic takes center stage, the world has turned to the internet for businesses that have virtual alternatives. There has been tremendous increase in online activities, especially teleconferencing. However at the same time, many online businesses are plunging as a result of plummeting economic activities on and off the internet, putting even tech giants in disadvantaged positions.
Google, Facebook, Twitter etc. and every other social media company are witnessing massive decline in ads, as most of the startups fueling it have been badly hit by the pandemic.
Major layoffs are taking place in many companies as they gasp for surviving air to stay in business. Direct-to-consumer online firms that sell great products ranging from clothes, food and wearables are facing a rocky downturn as purchases decline.
The decline in purchases means the firms, many of them startups, will have to reduce the number of ads they buy. And it is happening swifter than imagined that ads in social media platforms have slowed down at least to 50%.
About two weeks ago, many startups were notably laying off 20% of their workforce as the economic pressure of the virus intensified. Now, cut in work employees are getting to half of the company’s workforce.
Redfin has cut 41% of its staff, including agents, recruiters, renovators etc. A Boston-based well-funded startup that sells hardware and software to restaurants laid off about 1,000 workers on Tuesday. The firm is said by PitchBook to have over 2,400 workers earlier this year. And many more are going to happen in the coming weeks as everyone is racing to salvage what he can.
Though it is more like a panic reaction, these mostly are the companies who buy ads and keep social media advertising spaces busy. But there is hope that many of them will stay in business as governments continue to dole out bailout funds for small businesses.
The U.S. seems likely to expand the figures of the government’s Protection Program. The original $350 billion fund rolled out to help small businesses stem the tides of the pandemic appears to be running out not quite long after the program started.
The Senate majority leader Mitch McConnell and minority leader Schumer said they support putting additional $250 billion into the program.
Canada has followed suit, committing $107 billion in support of small businesses struggling to survive. This it plans to implement by altering the summer jobs program to accommodate more people (70,000) during this time. That way, small businesses and organizations will have an austerity fund to lean on and survive the coronavirus turmoil.
“Small businesses and community organizations are the backbone of our economy, and a critical lifeline for communities across this country. They are facing economic hardship and unprecedented service demands during the COVID-19 pandemic, and that’s why we are taking action now to get them the financial help they need to keep their doors open and support their communities,” said Prime Minister Justin Trudeau.
But with the cases of coronavirus rising in the United States and Canada, it is obvious that the fund will not sustain thousands of businesses depending on it. So the situation calls for more than government intervention.
Facebook had earlier set out $100 million to help small businesses around the world. Though the fund seems quite insignificant, it beckons on others to show concern about the little ones who have been responsible for the enormous revenue the tech giants have been amassing over the years.
In the U.S. the tech giants have $570 billion cash reserve to fall back on, a part of the government’s measures to keep the economy alive.
The CEOs of the big tech companies have been donating handsomely to the cause of COVID-19 elimination.
Twitter CEO Jack Dorsey announced on Tuesday he is giving $1 billion, 30% of his wealth to the fight against the pandemic. Others have responded too. Bill Gates, through the Bill and Melinda Gates Foundation has been forth and doing with funds and research for a cure for the COVID-19 pandemic.
The fight to halt the pandemic from spreading is paramount but making sure that small businesses survive is also important. And it has become apparently a job that governments need help with, especially in developing countries where small businesses are not likely to get bailouts from governments. Analysts believe that Google, Twitter and others should follow the steps of Facebook, donating to support small businesses around the world in order to ad spaces bubbling with sales.
Media executives are already reporting 50% decline in ad bookings, and analysts believe that none of the big tech companies are immune to it.
According to Standard Media Index, which tracks advertising trends: “Ad platforms like Facebook and Google will lose $50 billion ad revenue cumulatively over the next four years in the U.S. from small and medium-size businesses going out of business as a result of the pandemic lockdowns.”