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Google’s ad revenue expected to drop for first time in 12 years

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Google’s advertising business is experiencing a major slowdown due to the coronavirus-battered travel industry.

The search giant will see its ad revenue drop for the first time in more than a decade, according to data from research firm eMarketer, as the travel industry — normally one of the platform’s most rock-solid spenders — pulls back as vacationers have been forced to stay at home for months because of the pandemic.

Google’s US ad revenue is projected to decline 5.3 percent by the end of the year, to $39.6 billion. The drop, eMarketer says, cuts the Mountain View, Calif.-based company’s market share from 31.6 percent to 29.4 percent.

The research firm first began tracking Google’s numbers in 2008, and Monday’s report represents the first time it has ever projected a decline.

“Ad revenues will decline this year primarily because of a sharp pullback in travel advertiser spending, which in the past has been heavily concentrated on Google’s search ad products,” eMarketer principal analyst Nicole Perrin said.

Perrin added that e-commerce spending is down, noting that Amazon pulled its ads from Google search earlier in the pandemic as it struggled to keep up with customer demand for its products. 

Google’s two main rivals in the advertising space, Facebook and Amazon, are also projected to see their growth slow drastically this year, but will not enter negative territory. Facebook’s share of the digital ad market will increase from 22.7 percent to 23.4 percent, while Amazon will see its slice of the pie increase from 7.8 percent to 9.5 percent.

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