A pinch where it hurts: can Facebook weather the ad boycott?

A pinch where it hurts: can Facebook weather the ad boycott?

On Wednesday, more than 500 companies officially kicked off an advertising boycott intended to pressure Facebook into taking a stronger stand against hate speech. CEO Mark Zuckerberg has agreed to meet with its organizers early next week.

But whether Zuckerberg agrees to further tighten the social network’s carefully crafted rules probably boils down to a more fundamental question: Does Facebook need big brand advertisers more than the brands need Facebook?

In a broad sense, the current boycott, which will last at least a month, is like nothing Facebook has experienced before. Following weeks of protests against police violence and racial injustice, major brands have for the first time joined together to protest still-prevalent hate speech on Facebook’s platforms by taking aim at the social network’s $70 billion in annual ad revenue.

After years of piecemeal measures to address hate, abuse and misinformation on its service, Facebook’s critics hope that pinching the company where it hurts will push it toward more meaningful change. As of Wednesday, 530 companies have signed on — and that’s not counting businesses like Target and Starbucks, which have paused advertising but did not formally join the “Stop Hate for Profit” campaign, which calls its action a “pause” rather than a boycott.

“Many businesses told us how they had been ignored when asking Facebook for changes,” campaign organizers wrote in a letter to advertisers this week. “Together, we finally got Facebook’s attention.”

But Facebook’s already-tarnished public image may sustain more damage than its business. If the ad pause lasts one month, Citi Investment Research analyst Jason Bazinet estimates, the likely impact on Facebook’s stock will be $1 per share. Based on Wednesday’s closing price of $237.92, that’s a decline of less than half a per cent.

If the businesses extend their boycott indefinitely, Bazinet suggests the likely impact would be $17 a share, or about a 7% decline. That’s less than the 8% drop Facebook shares sustained on Friday after global consumer-products maker Unilever said it would pause advertising on Facebook and Instagram for the rest of the year.

Also, Facebook shares have already bounced back from that dip.

On Wednesday, Nick Clegg, Facebook’s vice-president of global affairs and communications, tried to reassure businesses that Facebook “does not benefit from hate” and said the company has every incentive to remove hate speech from its service. He acknowledged that “many of our critics are angry about the inflammatory rhetoric President Trump has posted on our platform and others, and want us to be more aggressive in removing his speech.”

Clegg, however, offered few concessions, and instead repeated Zuckerberg’s frequent talking point that “the only way to hold the powerful to account is ultimately through the ballot box.” He pointed to Facebook’s get-out-the-vote efforts as evidence of the company’s commitment, along with the billions of dollars, tens of thousands of content moderators and other investments it has made in trying to improve its platform.

While Facebook is making efforts to hear out its critics, it remains clear that ultimate decisions will always rest with its founder and CEO, who holds the majority of the company’s voting shares and could effectively run the company for life, should he desire to.

It’s not clear that he’ll see any reason to bend further to meet protesters’ demands.

“Data of past boycotts suggests the observable impact is relatively mild,” said Brian Wieser, global president of business intelligence at GroupM, advertising holding company WPP’s media agency arm.

At the same time, he added, given these “extraordinary times,” it’s possible that a long-term, pervasive boycott could shift advertising dollars away from Facebook to other companies.

Beyond bad PR, though, experts say the protest isn’t likely to make a lasting dent in Facebook’s ad revenue, in part because plenty of other advertisers can step in. Stifel analysts said in a note to investors this week that “well over” 70% of Facebook’s advertising dollars come from small and medium-sized businesses and “these advertisers may be less concerned with the optics of where their ads are placed than large brands.” Citing data from Pathmatics, Stifel said the top 100 brands spent roughly $4.2 billion on Facebook ads last year, representing around 6% of the company’s nearly $70 billion of total ad revenue in 2019.

Facebook hosts more than 8 million advertisers, according to JPMorgan. “We do not expect significant risk to numbers for Facebook as many other marketers … will take advantage of potentially lower-priced inventory,” JPMorgan analyst Doug Anmuth wrote in an investor note.

___

AP technology writer Mae Anderson contributed to this story.

Barbara Ortutay, The Associated Press

facebook

Just Posted

Alberta continues to wrestle with high COVID-19 case numbers. (NIAID-RML via AP)
Red Deer up to 858 active cases of COVID-19

Province reports additional 1,799 cases of the virus

ALERT seized drugs and a variety of guns from a home in Lacombe on May 5 after an investigation. (Photo courtesy of ALERT)
Guns and drugs seized in Lacombe

Lacombe Police Service and ALERT worked together in a joint investigation

Best of Lacombe
Vote for the Best of Lacombe Readers’ Choice Awards 2021

Vote until June 6th, and the results will be published June 24th, 2021

Karlee Prins standing in front of Lacombe City Cinema. (Photo Submitted)
Lacombe resident creates Go Fund Me page to help ailing Lacombe City Cinema

Karlee Prins created a Go Fund Me Page the help the local theatre and family who own it

Prime Minister Justin Trudeau holds a press conference in Ottawa on Tuesday, May 11, 2021. Trudeau is rejecting accusations from Alberta’s justice minister that his federal government is part of a trio rooting for that province’s health system to collapse due to COVID-19. THE CANADIAN PRESS/Sean Kilpatrick
Alberta justice minister sorry for saying feds, others rooting for COVID disaster

Earlier Tuesday, prior to Madu’s apology, Trudeau rejected the accusations

In this Monday, March 15, 2021 file photo a vial of AstraZeneca vaccine is pictured in a pharmacy in Boulogne Billancourt, outside Paris. Questions remained Wednesday about the future of the Oxford-AstraZeneca vaccine in Canada, as Manitoba limited use of the shot and Ontario announced it planned to save an incoming shipment to use as second doses. THE CANADIAN PRESS/AP/Christophe Ena, File
Questions remain about the future of the Oxford-AstraZeneca shot in Canada

More than two million Canadians have received AstraZeneca and 17 have been confirmed to have VITT

Lumber is shown in the back of a van in this recent image provided by the Saskatoon Police Service. The skyrocketing prices for lumber is fuelling a trend that has authorities across the country warning builders to keep their guard up. THE CANADIAN PRESS/HO-Saskatoon Police Service-Const. Derek Chesney *MANDATORY CREDIT*
‘It is a gold mine:’ Builders warned of rising lumber thefts across Canada

Many North American mills curtailed production temporarily earlier in 2020 because of COVID lockdowns

Prime Minister Justin Trudeau holds a press conference in Ottawa on Tuesday, May 11, 2021. Trudeau is rejecting accusations from Alberta’s justice minister that his federal government is part of a trio rooting for that province’s health system to collapse due to COVID-19. THE CANADIAN PRESS/Sean Kilpatrick
Trudeau rejects Alberta cabinet minister accusation PM wants COVID-19 health disaster

Alberta has recently had COVID-19 case rates that are the highest in North America

The RCMP logo is seen outside Royal Canadian Mounted Police "E" Division headquarters in Surrey, B.C., on Friday, April 13, 2018. THE CANADIAN PRESS/Darryl Dyck
Jewish group extremely disturbed by reports of Hitler Youth flags in Alberta towns

RCMP spoke to the property owner, who refused to remove the flag

Alberta’s environment department has known for years that toxins from old coal mines are contaminating populations of the province’s official animal, the bighorn sheep. THE CANADIAN PRESS/Craig Bihrl
Alberta government knew bighorn sheep contaminated with coal mine selenium, scientist says

Jeff Kneteman says Alberta Environment has known about the problem in bighorn sheep for years

Prime Minister Justin Trudeau receives his COVID-19 AstraZeneca vaccination in Ottawa, Friday, April 23, 2021. THE CANADIAN PRESS/Adrian Wyld
75% of Canadians need 1st vaccine dose to have more normal summer: Trudeau

The country is on track to hit a major milestone on the road to COVID-19 herd immunity Tuesday, with 40% vaccinated with a 1st dose

Most Read