More than 500 companies officially launch a boycott of Facebook



More than 500 companies officially launched an advertising boycott on Wednesday to pressure Facebook to take a stronger stance against hate speech. Meanwhile, the CEO of the social network Mark Zuckerberg has agreed to meet with its organizers early next week.

But whether Zuckerberg agrees to tighten up carefully crafted social media rules boils down to a more fundamental question: Does Facebook need advertising from big brands more than brands need Facebook?

In a broad sense, the current boycott, which will last for at least a month, is unlike anything Facebook has faced before. After weeks of protests against police violence and racial injustice, big brands have teamed up for the first time to protest the hate speech that continues to prevail on Facebook platforms, targeting the network’s advertising revenue. Social.

After years of partial measures to address hate, abuse and misinformation in his service, Facebook critics hope that hitting the company where it hurts will bring about more significant change. As of Wednesday, 530 companies had joined, not to mention businesses like Target and Starbucks, which have suspended their ads but did not formally join the “Stop Hate for Profit” campaign, which describes their role as a “pause” rather than like a boycott.

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

But Facebook’s already tarnished public image may suffer more damage than your business. If the ad pause lasts for a month, Citi Investment Research analyst Jason Bazinet estimates that the likely impact on Facebook’s actions will be $ 1 a share. Based on Wednesday’s closing price of $ 237.92, it’s a decrease of less than half a percentage point.

If companies extend their boycott indefinitely, Bazinet said the likely impact would be $ 17 a share, or a decrease of 7%. It’s less than the 8% drop Facebook shares suffered on Friday after global consumer goods maker Unilever reported it would pause its advertising on Facebook and Instagram for the rest of the year.

Facebook shares have already recovered from that hit.

Stifel analysts noted in a note sent to investors this week that “well above” 70% of Facebook’s advertising revenue comes from small and medium-sized companies, and “these advertisers may be less concerned with the optics of where your ads are placed than the big brands. ” Citing Pathmatics data, Stifel said the top 100 brands spent approximately $ 4.2 billion on Facebook ads last year, accounting for about 6% of the company’s nearly $ 70 billion of total ad revenue in 2019.

Facebook has more than 8 million advertisers, according to JPMorgan. “We don’t forecast any significant risk to Facebook numbers, as many other brands … will take advantage of potentially lower-priced inventory,” wrote Doug Anmuth, an analyst at JPMorgan, in a note to investors.

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