Google is going to take a hit in revenue as travel websites are slashing online ad spending amid the COVID-19 pandemic.
The tech giant is significantly dependent on advertising in terms of its overall revenue, as 84 percent of its revenue came from advertising last year. Google will now face the biggest interruption in its ad business since the Great Recession.
CNBC notes that online travel websites spend significant money to advertise on Google, since numerous people book their trips after searching for things like “hotel in Paris” or “flight to London.”
These types of keywords are pricey, but popular travel websites like Expedia and Booking pay for them because they receive significant profit through reservations.
For instance, Booking spent $4.4 billion USD (about $6.1 billion CAD) on marketing on Google in 2019. They company’s ads on Google account for almost 90 percent of its yearly marketing budget.
Google will likely continue to face impacts of the virus throughout the year, as large conferences and music festivals have been cancelled, which will in turn impact its ad business even more.
However, the tech giant is aware of the problem, and has taken steps to protect itself. Google has already slashed its marketing budget in half for the second half of the year.