The advertising boycott did not significantly damage Facebook's revenue. Photo / AP
Major advertisers on Facebook reduced their spending by millions of dollars in July, but not enough to significantly damage the platform's revenue.
The advertiser boycott of Facebook took a toll on the social media giant, but it may have caused more damage to the company's reputation than to its bottom line.
The boycott, called #StopHateForProfit by the civil rights groups that organised it, urged companies to stop paying for ads on Facebook in July to protest the platform's handling of hate speech and misinformation. More than 1,000 advertisers publicly joined, out of a total pool of more than 9 million, while others quietly scaled back their spending.
The 100 advertisers that spent the most on Facebook in the first half of the year spent US$221.4 million ($331.44 million) from July 1 through July 29, 12 per cent less than the US$251.4 million spent by the top 100 advertisers a year earlier, according to estimates from the advertising analytics platform Pathmatics. Of those 100, nine companies formally announced a pullback in paid advertising, cutting their spending to US$507,500 from US$26.2 million.
Many of the companies that stayed away from Facebook said they planned to return, and many are mom-and-pop enterprises and individuals that depend on the platform for promotion. Mark Zuckerberg, Facebook's chief executive, has emphasised the importance of small business, saying during an earnings call Thursday that "some seem to wrongly assume that our business is dependent on a few large advertisers."
Facebook said that the top 100 spenders contributed 16 per cent of its US$18.7 billion in revenue in the second quarter, which ended June 30. During the first three weeks of July, Facebook said, overall ad revenue grew 10 per cent over last year, a rate the company expects to continue for the full quarter.
The boycott complicated planning for advertisers. Kansas-based digital agency DEG had "a whirlwind of a month" as its small to midsize clients grappled with whether they could reach enough customers without Facebook, said Quinn Sheek, its director of media and search. Facebook and its subsidiary Instagram make up more than one-third of digital spending for DEG clients.
Of the 60 per cent of DEG clients that joined the July boycott, 4 out of 5 are planning to return to Facebook in August, with many having "decided it's too much for them during a difficult economic time to remain off," Sheek said. Still, the boycott helped amplify discussion of toxic content on Facebook. The issue was raised in a congressional hearing this past week and in repeated meetings between ad industry representatives and Facebook leaders. Facebook, which said it is working with industry groups like the Global Alliance for Responsible Media, released the results of a civil rights audit last month and agreed to hire a civil rights executive.
"What could really hurt Facebook is the long-term effect of its perceived reputation and the association with being viewed as a publisher of 'hate speech' and other inappropriate content," Stephen Hahn-Griffiths, executive vice president of the public opinion analysis company RepTrak, wrote in a post last month.
In addition to the prevalence of hate speech on the platform, its critics have also focused on the company's treatment of user privacy and foreign election interference.
"You could argue that Facebook has a bloodied nose and two reputational black eyes," Hahn-Griffiths wrote.
Sheryl Sandberg, Facebook's chief operating officer, said during the company's earnings call that, like the boycott's organisers, "we don't want hate on our platforms, and we stand firmly against it."
The ad industry was already in upheaval when the boycott began, as businesses closed, layoffs swept through the economy, and homebound consumers slowed their shopping. Before they reduced spending on Facebook in July, advertisers like Microsoft, Starbucks, Unilever and Target took a temporary break from the platform in June as many companies were reacting to pandemic-related marketing budget cuts and widespread protests over racism and police brutality. Disney's spending on Facebook has mostly trended downward since late March, according to Pathmatics.
Last month, large advertisers like Procter & Gamble, Samsung, Walmart and Geico sharply curtailed paid advertising on Facebook without joining the official boycott, according to Pathmatics. Others, like Hershey and Hulu, beefed up their spending on alternate platforms like Twitter and YouTube.
Companies like Beam Suntory and Coca-Cola have vowed to continue pressuring Facebook, especially as the presidential race heats up. On Thursday, ice cream company Ben & Jerry's said it planned to keep withholding spending on product promotions through the end of the year "to send a message."
The advertiser boycott "was a warning shot, an opening salvo," said Jonathan Greenblatt, chief executive of the civil rights group the Anti-Defamation League, which helped set up the boycott. Organisers and other groups now plan to expand the boycott into Europe, to include Facebook users, and to address other concerns, like the presence of child sexual abuse on the platform.
Half the companies that work with agency Allen & Gerritsen in Boston and Philadelphia participated in the boycott, said Derek Welch, its vice president of media. Many felt it was important to "do something that is meaningful and tangible in a sea of brands putting out very well-meaning statements," he said.
Welch said the agency's clients typically spend US$150,000 to US$200,000 a month total on Facebook. Several plan to continue boycotting.
"The big companies that have signed on have been great for visibility and getting the word out," he said. "But this is really all about these small businesses in aggregate who are spending US$30,000 here or US$50,000 there, whose decisions wouldn't normally make too much of a difference."
Written by: Tiffany Hsu and Eleanor Lutz
© 2020 THE NEW YORK TIMES
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