With the coronavirus pandemic raging on in the U.S. and across the world, social media giants Facebook (META 2.98%), Alphabet's (GOOG 1.25%) (GOOGL 1.27%) Google, Twitter (TWTR), and Snap (SNAP 2.24%) are seeing a huge uptick in usage. But that isn't translating into increased ad spending on the part of advertisers.

After all, travel is halted, events around the globe are canceled, and local businesses are shuttered, forcing marketers for these services and events to rein in their spending. That's prompted some of the nation's largest social media companies to issue warnings, and investors to run for the hills. 

But just how bad of an ad spending reckoning they face depends on how long the world is forced to shelter in place and if and when life becomes normal again.

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Image source: Getty Images.

Social media ad spending takes a small business hit 

Investment banking firm Cowen & Co. expects Facebook and Google together to lose more than $44 billion in ad revenue because of the COVID-19 pandemic, with Facebook poised to see an ad spending drop of $15.7 billion and Google a decline of $28.6 billion. Cowen forecasted Twitter to lose about $700 million and Snapchat to see a $977 million decline in ad revenue.

In normal times, social media is the place to be for advertisers, given the huge number of users and the reach ads on platforms like Facebook have. But they are typically self-serve ads, which means they are easy to cancel when business goes south. It doesn't help that many of the ads on social media are purchased by small businesses that are taking a big hit in the wake of the pandemic. If some of them don't recover, it could mean lost ad sales forever for these social media companies. 

That reality has prompted both Twitter and Facebook to warn in March that they are seeing a slowdown in ad sales, even as usage skyrockets. Google hasn't said anything about ad sales yet, but expectations are high that it too is experiencing a big decline in business. 

But it's not just the social media companies that are raising concerns about ad spending. Interpublic Group of Companies (IPG -0.13%), one of the world's biggest advertising companies which counts Microsoft and Amazon as customers, withdrew its financial targets for the full year due to the pandemic. "In the current environment, visibility into marketing and media spend is extremely challenging," Michael Roth, Chairman and CEO of IPG, said in a statement at the time.

To make things worse, it's not only marketers that are reining in their ad spending. Political ads are also taking a hit, and not just on television. While political candidates are running some ads on the likes of Google and Facebook, it's tiny compared to the past.

With cash in the coffers, Facebook and Google should be ok

Without a doubt, social media companies face an ad reckoning. But with a ton of cash in the coffers and a huge audience that is growing rather than shrinking, they should come out of the pandemic bloodied and bruised, but strong. It doesn't hurt that the likes of Facebook and Google have little in the way of debt, and the moves they have been taking to help out during the COVID-19 pandemic could boost their reputation with consumers and advertisers. 

Cowen, the Wall Street firm that predicted Facebook and Google will lose $40 billion combined in ad revenue, also thinks ad spending will bounce back in 2021. Cowen predicts Facebook will see a 23% uptick in ad sales year over year. Cowen analysts also noted that even in 2020, with double-digit declines in ad spending, Google and Facebook are still expected to generate billions of dollars in operating income. Cowen pegs that at $54.3 billion for Google and $33.7 billion for Facebook.

That's not too shabby for an industry that is taking a big hit because of the COVID-19 pandemic