Facebook has experienced its fair share of drama over the last several years (remember 2018’s #DeleteFacebook?), but this year is proving to be an especially challenging year for the social media giant. Currently, over 750 large corporations have joined the likes of Starbucks, Coca-Cola, Adidas, The North Face and Hershey, in a pledge to go silent on the platform, halting all advertising. And every day, that number has been snowballing as more major companies join the #StopHateForProfit boycott, which also includes Facebook-owned platform, Instagram.
The boycott is in response to the growing frustration with Facebook’s lack of policing hate speech and other dangerous or false content on it’s platform. Just days ago, CEO Mark Zuckerberg, Sheryl Sandberg and other Facebook executives met with boycott organizers, civil rights activists and advocacy groups via Zoom. Largely, it seem organizers were not impressed by Facebook’s lack of hard and fast plans for preventing hate speech and disinformation.
What will this boycott ultimately end up costing Facebook? Plenty of experts agree, that number is likely to be in the billions. Eric Schiffer, chairman and chief executive of the Patriarch Organization and Reputation Management Consultants, says he’s expecting, “a revenue bleed out of more than $7.5 billion” this year (Dwoskin & Telford, The Washington Post). The majority of the platform’s revenue comes from it’s global advertisers, however ultimately, that won’t move Facebook’s bottomline much at all.
To put things into perspective, Facebook’s ad revenue in 2019 was $69.7 billion (The Wall Street Journal) Of that, the 8 largest boycotting brands spent about $689 million, and the top 100 spend $6.4 billion. That leaves the great majority of revenue coming from small and mid-sized companies- about 76%, according to a recent Financial Post article.
For huge corporations like Verizon or Ford, those ad dollars are a mere fraction of their marketing budgets.
But, for smaller brands and advertisers, it’s no drop in the bucket. If you’re one of the many small businesses that boost your posts or run ad campaigns on Instagram or Facebook, you’re probably wondering what kind of repercussions boycotting may have for you. If you ask Mari Smith, co-author of Facebook Marketing: An Hour A Day, that question, she believes, “And if small and medium businesses cut their ads altogether, even for one month, this could cause a massive loss of revenue for those business owners, Smith said, “joining the ad boycott would actually negatively impact their bottom line infinitely more than it would Facebook’s,”(Gollom, CBC News) In order to really hurt Facebook, these major players would have to cease advertising for much longer than of July.
Facebook advertising has proven to be effective at reaching a highly targeted audience and produce a uniquely rapid ROI. Many experts believe it’s “the most targeted traffic ad dollars can buy.” (Gollom, CBC News) Today, most small businesses realize the importance of a consistent social media presence and the value of that advertising. Your consumer is on Facebook, and if you’re not, you’re missing a critical opportunity to get your message to them. Boycotting advertising may not be realistic for many small business. It’s the central medium for reaching their key audience.
As the boycott gained steam, Facebook’s share price fell 9%- that’s around $56 billion of its market value (Gollom, CBC News). It prompted CEO Mark Zuckerberg to announce his plans to more effectively “prohibit hate speech in ads and better protect groups such as immigrants from attack” (Barker, The Financial Times). It remains to be seen what kind, if any, of a lasting impact the boycott with have on Facebook, and if the platform can stick to it’s promises of policy changes enough to appease advertisers and gain back their business.
Gollom, Mark. CBC News. “Companies are boycotting Facebook. But who is Hurt More By The Tactic?”. Jun 30, 2020. https://www.cbc.ca/news/business/facebook-boycott-ads-1.5631696
“Facebook Faces an Advertiser Boycott. Will Its Business Take a Hit?” The Wall Street Journal. July 1, 2020.https://www.wsj.com/graphics/facebook-faces-an-advertiser-boycott/
Dwoskin, Elizabeth and Telford, Taylor. “Facebook is working to persuade advertisers to abandon their boycott. So far, they aren’t impressed.” The Washington Post. July 3, 2020. https://www.washingtonpost.com/technology/2020/07/03/facebook-advertiser-boycott-hate/