Major corporations including CVS Health, Coca-Cola, J.M. Smucker Company, Diageo, Mars, HP and Verizon will continue pausing their advertisements on Facebook after the official end of a major advertiser boycott of the platform.
Advertisers announced various degrees of pauses to their social media advertising budgets in June, after a campaign called ”#StopHateForProfit” called on advertisers to boycott Facebook for the month of July. Some companies said they’d only pause ads on Facebook for July. Others said they’d do it through the end of the year.
And others extended the pause to other social media companies like Twitter and Alphabet’s YouTube. All in all, more than 1,000 groups and companies took part in the boycott, with the goal to pressure Facebook into taking more stringent steps to stop the spread of hate speech and misinformation on its platform.
Though the movement may have hit Facebook reputation-wise, there doesn’t appear to have been much of an impact on revenue. Wedbush analysts said in a research note last week that they expected “minimal financial impact from brand boycotts,” writing that given the duration of announced boycotts, the firm expected roughly $100 million of “near term brand revenue is at risk, representing less than 1% of [year-over-year] growth in Q3.”
In its second-quarter earnings report last week, Facebook listed the boycotts from major advertisers as a factor that would negatively impact its revenue this quarter. Yet the company said its year-over-year ad revenue growth rate in the first three weeks of July were in-line with its second-quarter year-over-year ad revenue growth rate of 10%, and that its ad revenue growth rate for the third quarter will be “roughly similar to this July performance.”
In short, Facebook signaled to investors that the boycotts won’t be a huge hit, and ad revenue will continue to grow despite the boycotts. According to marketing analytics platform Pathmatics, the top U.S. 100 advertisers on the Facebook platform in July 2020 spent a combined $338.2 million, while the top U.S. 100 advertisers in July 2019 spent $389 million, though it should be noted many marketing budgets have also been slashed amid the pandemic.
But Facebook is increasingly less reliant on big spenders as its advertiser base grows. Last week, the company said its top 100 advertisers represented 16% of its $18.3 billion in total ad revenue in the second quarter, a lower percentage than a year prior. The company now says it has more than 9 million advertisers on its platform, mostly small businesses.
A Facebook spokesperson said the company doesn’t supply data to Pathmatics, and the firm’s estimates are “very limited.” Pathmatics bases its data on a panel of Facebook users along with other sources.
Facebook CEO Mark Zuckerberg didn’t seem too perturbed by the boycott when speaking with employees in June, saying ”[his] guess is that all these advertisers will be back on the platform soon enough,” The Information reported in July.
“We’ve invested billions of dollars to keep hate off of our platform, and we have a clear plan of action with the Global Alliance for Responsible Media and the industry to continue this fight,” a Facebook spokeswoman said Monday. Last week, the company published a blog post outlining the company’s actions on civil rights issues.
The “Stop Hate for Profit” campaign, in an email to supporters last week, said the success of its campaign was “unmistakable” and that it “forced Facebook to make a series of concessions to long-standing demands of civil rights organizations,” such as the creation of a senior role to oversee civil rights and a dedicated team to study algorithmic bias. But they said they still wanted to see more from the company.
“To be clear, Mr. Zuckerberg has not yet approached the type of meaningful action that we want to see,” they wrote. “The issue is not that Facebook just lags competitors in working systemically to address hate and bigotry on their platform. To use a favorite term of Facebook’s leadership, Facebook’s attitude towards seriously addressing how their algorithms push hate, violent conspiracy theories and disinformation is transparently ‘inauthentic.’”
Stop Hate for Profit said last Thursday that it sees the movement growing in Europe and in other areas and have “explicit commitments” from advertisers to participate in future pauses and new actions if they see fit. The organization didn’t provide specifics in the letter on new advertisers joining the boycotts in Europe. They also said many companies said they aren’t ready to return to Facebook’s platforms.