The #StopHateForProfit movement -- originally started by civil rights groups on June 17 as an ad boycott of Facebook only, limited to the month of July -- has quickly turned into a broader phenomenon.
Over the weekend, Starbucks and Diageo joined the growing list of major advertisers suspending all or part of their social media advertising in reaction to the increasing influence of the movement's call for a crack-down on hate speech.
Both companies announced global pauses on all social media platforms for indeterminate periods of time, and both indicated that they will continue to "discuss" how to address hate speech with their "media partners."
Starbucks appears to be biggest Facebook advertiser to date to pause ads on the platform. The company spent $94.9 million on Facebook advertising in the U.S. alone in 2019, according to estimates by analytics platform Pathmatics.
Liquor giant Diageo is estimated to have spent $22.9 million on Facebook in the U.S. last year.
Other brands announcing pauses late last week or over the weekend include Beam Suntory and American Honda (the latter's estimated 2019 U.S. Facebook spend was $6 million). Both are suspending ads in the U.S. on Facebook and Instagram only for indefinite periods.
Birchbox on Friday said it will pause Facebook and Instagram ads in July and reallocate ad dollars to other platforms. The company, which had been "steadily reducing its reliance on the social media giant over the past two years," according to The New York Times, is estimated to have spent only about $947,000 on Facebook in the U.S. in 2019.
The U.S. Facebook estimates for some of the other large advertisers that have implemented suspensions include $42.4 million for Unilever, $22.9 million for Verizon, and $22.1 million for Coca-Cola. The list of also includes Eddie Bauer, Hershey, Levi's, Lulumon, Magnolia Pictures, Patagonia, The North Face, REI and Upwork.
As analysts have pointed out (see today's RTBlog), the pure financial impacts if even all of Facebook's top advertisers pausing their advertising on Facebook and its parent company would be relatively modest, accounting for about 6% of Facebook's ad revenues, which generated most of its $70 billion in total revenues last year.
Most of those ad dollars come from small and mid-sized companies. And while most of the 184 companies on the boycott list as of Monday morning are not large, it would "likely take tens of thousands of [smaller advertisers], acting over a significant period of time, to put a big dent in Facebook's bottom line," noted CNN Business' Brian Fung. Further, due to the advertising pullback caused by the pandemic, it will be difficult to assess the true financial impacts of any ad boycott, he pointed out.
Analysts also note that Facebook Inc. CEO Mark Zuckerberg has total voting control over the company and can't be removed by a board, in contrast to most other big platforms' leadership.
Still, when the company's stock fell 8.3% on Friday on the news that Unilever was suspending its advertising on its platforms (and rival platform Twitter), Facebook's market value lost an estimated $56 billion -- and Zuckerberg's personal net worth dropped by about $7.2 billion (though he still had $82.3 billion to fall back on, according to the Bloomberg Billionaires Index).
And Zuckerberg announced the most significant changes thus far to Facebook's hate-speech policies on Friday, following the Unilever move -- although they so far show no signs of stopping the exodus of advertisers as yet.
“Given the amount of noise this is drawing, this will have significant impact to Facebook’s business,” Wedbush Securities analyst Bradley Gastwirth wrote in a research note quoted by Bloomberg, which reported that Facebook Inc.'s shares were down 2.5% in early trading Monday. “Facebook needs to address this issue quickly and effectively in order to stop advertising exits from potentially spiraling out of control.”
Timing is part of the problem. Bloomberg noted that prior to the boycott, Facebook "was already bracing for weakness in the second quarter, which ends this week," with CFO Dave Wehner having warned in an April earnings call that he saw the “potential for an even more severe advertising industry contraction.”
Any lasting impacts on Facebook Inc. and other big platforms will depend, of course, on how long advertisers withhold their spending. And that in turn will depend on how successful they are in using other media during such a suspension, and whether, given their intense concern about safeguarding their brands, significant numbers of consumers actually begin to show a shift in sentiment or behavior toward Facebook and the other dominant platforms. Consumer trust and perceptions of brands are, of course, key factors in companies' market values.
Ofcourse the danger is that they discover dropping FB has no effect on their business at all. Bye. Bye. Mark...
http://pjlehrer.blogspot.com/2020/05/a-democracy-is-supposed-to-be-majority.html