In the month since the coronavirus pandemic began exploding across the U.S., Facebook has pledged to spend more than $200 million. Two weeks ago, the company said it would give away $100 million in grants to small businesses affected by the outbreak, and this morning it pledged another $100 million toward supporting the journalism industry, which is seeing ad rates fall at a precipitous rate. In terms of Facebook’s overall revenue and the money it has stashed away, that $200 million is a drop in the bucket. But it can also be interpreted as a sign of desperation.
In a non-pandemic scenario, Facebook is nearly bulletproof. Its ad revenue comes from a wide variety of clients, so a downturn in one or a handful of industries wouldn’t destabilize the entire operation, nor would the loss of a single big client. Facebook has repeatedly asserted during this presidential election cycle that political advertising, which will see record spending, is a fraction of a percentage of its overall revenue.
What keeps Facebook stable is a constant flow of ad clients and a constant flow of user-generated content of all varieties — photo, text, video — and all levels of accuracy (Facebook has historically tried to position itself as a neutral platform without an editorial mind-set). These constants have buoyed Facebook, even as instability has hit other sectors.
In pandemic mode, however, even Facebook has to contend with the crisis hitting close to home. As local businesses across the country see less foot traffic and fewer customers, their ad spending has decreased (hence the $100 million pledge to small businesses). As films’ theatrical releases are delayed and albums get pushed back, those enormous media budgets are being slashed too. Meanwhile, as Facebook brings in less ad money, people are leaning on it harder than ever, using it to sustain social ties across distances — video chatting, livestreaming, coordinating community outreach in Facebook Groups, and posting to their Stories. Ad spending is dropping significantly as operating costs are rising substantially in kind.