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Home›Accounts›The Facebook ad boycott is not over

The Facebook ad boycott is not over

By Anita Leet
March 11, 2021
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July has passed and to the chagrin of the #StopHateForProfit campaign and the 1,100 companies that have joined it, Facebook (NASDAQ: FB) has not sufficiently changed its policies on hate speech and political disinformation.

In June, the nonprofit called for a boycott of the social network because of what it believes to be its role as a voice for hatred and disinformation. Now that the month is over, we have some data to examine the impact of the campaign.

Image source: Facebook.

Facebook’s takeover stalled

News was mostly lost in the reshuffle as Facebook stock skyrocketed on its earnings report after the breeze past estimates, but the income at social media giant actually decelerated in the first weeks of July, increasing only 10%. Although this is the same as the second quarter total, Facebook said revenue growth was stable for the first three weeks of April, implying growth of around 15% in May and June.

While Facebook’s business has evolved in line with the economy in general, ad sales likely picked up gradually during the quarter, making July’s results even more paltry. The company said it expects revenue growth to remain around 10% in the third quarter, holding steady from the second quarter – a sign that the impact of the boycott may persist.

In contrast, Facebook’s competitors expect sequential improvement from Q2 to Q3. Google-parent Alphabet noted a modest increase in search revenue in July, signaling a year-over-year increase after a 10% drop in the second quarter. Pinterest reported 50% revenue growth for most of July after revenue only increased 4% in the second quarter as July benefited from favorable winds from the Boycott of Facebook Ads, and he expects revenue growth of around 30% for the third quarter as a whole. AT Break, revenue growth accelerated from 17% in the second quarter to 32% in the first 19 days of July. Twitter gave no update on its July figures, but said performance was up at the end of the second quarter. Facebook is therefore the only one among its peers to expect just flat sequential growth in the third quarter.

On his earnings call, management sought to minimize the impact of the boycott, noting that it was one of many headwinds in July and the third quarter, including macroeconomic uncertainty, a normalization of community engagement to the Following an earlier push, the impact of regulations like the California Consumer Privacy Act and changes to mobile operating platforms such as Apples iOS which will make targeting ads more difficult, as well as boycotting ads.

Management also explained that its top 100 advertisers only accounted for 16% of revenue in the second quarter and said it primarily serves small businesses as it now has 9 million advertisers on its platform.

What advertisers have done

What was most remarkable about the Facebook advertising last month was that the biggest impact did not come from the advertisers who declared themselves to be part of the boycott, but from those who quietly took it. joined. According to data from Pathmatics, this group of advertisers took home nearly $ 5 million in daily ad spend on Facebook. Overall, the top 100 advertisers spent $ 221.4 million last month, down 12% on the social media platform than a year ago, as some of the group’s advertisers actually increased their spending, with the aim of capitalizing on economic reopening. Among those who withdrew their spending without officially joining the boycott, there was Procter & Gamble, Samsung, Walmart, and Geico.

At this point, advertisers are divided on whether to continue the boycott. Some plan to keep their marketing dollars off Facebook, while others believe they have fulfilled their July forbearance pledge and are happy with Facebook’s response. Facebook’s Global VP of Business Solutions Carolyn Everson said Ad age that a number of boycotters are considering coming back to the site because Facebook has promised them a “set of deliverables, which we have sent … to a lot of customers. They have the timeline in their hands and I said to them, “hold us accountable. ”

However, these deliverables were not made public and an earlier meeting with boycott organizers left them dissatisfied, calling it a “disappointment.”

And after

It’s impossible to say how much of an impact the boycott is having, even though it appears to be slashing Facebook’s revenue growth by at least a few points.

As the first round of the campaign has passed, #StopHateForProfit has other plans for the future, including focusing on European businesses and Facebook users. The upcoming US election should also ensure that the issue remains in the spotlight. The campaign called the July boycott a “warning shot to the front of Facebook,” implying more action was to come. Meanwhile, a significant number of advertisers plan to continue to avoid Facebook, including Coca Cola, Suntory Beam, General Motors, Ford, Honda America, and Unilever, among others.

Based on the post-profit backlash, investors believe Facebook has passed its first test with the protests, but it probably won’t be the last time the issue will put pressure on the social media titan.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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