March 31, 2023


Delighting home maniacs

Facebook faces snowballing boycott from advertisers over content moderation

Facebook faces snowballing boycott from advertisers over content moderation

A giant digital sign is seen at Facebook's corporate headquarters campus in Menlo Park, California - JOSH EDELSON /AFP
A giant digital sign is seen at Facebook’s corporate headquarters campus in Menlo Park, California – JOSH EDELSON /AFP

Facebook has weathered privacy scandals, billion-dollar fines and even revolts from its own employees. But the company now confronts an attack aiming to hit it where it hurts – in the billions of dollars in advertising cash it rakes in every year. 

This week, brands including the ice cream company Ben & Jerry’s, the film distributor Magnolia Pictures and the outdoor goods companies Patagonia, REI and North Face have pledged to pull their advertising dollars from Facebook and Instagram for the month of July over the company’s policies on misinformation and hate speech.

On Thursday the stakes were raised when US mobile giant Verizon, which also competes with Facebook via its acquisition of Yahoo, also joined the campaign.

Silicon Valley’s great media companies, once projects of idealistic techies who open-sourced their code, have become history’s most powerful and profitable advertising companies. It makes them very rich, but also leaves them vulnerable to the whims of reputation-sensitive brands who in 2020 have a newly zealous focus on their moral and ethical positions. 

This isn’t the first time social media has been subject to an advertising boycott. In 2017 scores of brands abandoned Google’s YouTube after it emerged that they were having their content played on terrorist, hate speech and misinformation videos. The tactic worked, eventually forcing YouTube to ”demonetise” swathes of content (to the fury of content creators).

That crisis, however, was down to a failure of Google’s technology, which was failing to prevent the adverts from appearing on problematic content. This time around, critics object the Facebook leadership team’s conscious decision to be permissive towards groups and users – including the US president – who are accused of inciting violence and spreading racism. 

An unprecedented revolt

“This definitely feels different,” says Debra Aho Williamson, principal analyst at eMarketer. “It’s a more substantial action on the part of advertisers than we’ve seen in the past. 

“We’ve seen companies pull out of YouTube, and a few pulled out of Facebook around Cambridge Analytica… but the entire conversation around racial justice is bigger now than ever before.”

Roger McNamee, an early Facebook investor turned persistent critic, also hailed the impact of the boycott, which has been spearheaded by civil rights activist groups including the venerable National Association for the Advancement of Coloured People (NAACP) and the much newer Colour of Change, founded in the aftermath of Hurricane Katrina.

“When the NAACP, Color of Change, the Anti-Defamation League, Common Sense Media all get up together and say ‘these guys are undermining the civil rights of people in the USA and around the world, they are essentially enabling and empowering violence against out citizens,’ that is going to have an effect,” he told CNBC.

Some insiders are supporting the action too. The social media campaign Detox Facebook was founded by an anonymous group of people, many of whom who work in the digital advertising industry. 

“For brands that really care about taking a stand for an issue like Black Lives Matter, we found it a bit hypocritical to be using this cause to take a stance publicly, yet also pouring lots of money into advertising on Facebook, which is in a lot of ways complicit,” one member, a former Silicon Valley data scientist, told Adweek.

Because Facebook sells adverts via an automated auction system, a big enough boycott could send its internal market haywire, crashing the price of ads and thereby its bottom line.

The company is famously dependent on advertising, having so far failed to broaden its financial base into payments, consumer technology or other services in the same way as its rivals Google and Amazon.

Yet even with all this on their side, boycotters will have an uphill struggle to actually make Facebook feel pain. 

Facebook’s big blue wall

Compared to YouTube, its business model is less vulnerable to boycotts like this because of the sheer diversity of its customers. It has eight million active advertisers, from which it made almost $70bn (£56bn) last year. 

A huge portion of that revenue comes from Facebook’s extensive “long tail” of small businesses, with only 20pc of its money coming from its top 100 advertisers in the first quarter of last year. 

According to data from Pathmatics, an ad market analytics firm, Facebook’s biggest advertisers last year were Home Depot, which spent $179m, Walmart, which spent $147m, and Microsoft, which spent $116m. Taken together, Facebook’s top 25 advertisers spent around $2bn.

But even that is only about 6pc of Facebook total revenue of $32.2bn in the US and Canada that year. eMarketer, another analysis firm, predicts that it will rival that in 2020.

Moreover, as Aho Williamson notes, many of the companies involved in the boycott are already known for Left-wing stances. Many, too, have only committed to one month’s absence.

Some have continued to advertise on Instagram and still post ordinary content on Facebook, reaping the boycott’s PR benefits without unduly hurting their actual sales.

Those who do leave may swiftly be replaced, as happened in the early weeks of the pandemic. Brick and mortar businesses rapidly cancelled their advertising budgets, only to be supplanted by digital businesses taking advantage of bargain prices. 

According to Mike Grehan of the New York marketing agency Acronym, larger brandshave less to lose from abandoning the platform than smaller companies do.

“Smaller brands depend on the platform more for sales activity to grow their business, while larger brands are in it more for brand equity,” he says.

“In short, better known brands such as Patagonia and The North Face can shift budgets to other platforms to maintain market position so it’s less of a business threat to them than the smaller companies who rely on the platform for direct sales.”

Why small firms can’t afford to boycott

Indeed, if small businesses anywhere were likely to join the boycott it might be in Minneapolis, the midwestern US city where George Floyd was killed. But Max Rymer, whose digital marketing agency Nativ3 is based in the city centre, serving clients who are still recovering from riot damage, has seen few signs of that.

“We’re not hitting the panic button yet,” he says. “Where we’d start to get concerned would be if our small clients were even asking about it. Right now it hasn’t reached that tipping point.

Anthony Land-Closson, 11, of Wheat Ridge, Colo., draws with chalk at the George Floyd memorial outside Cup Foods, Thursday, June 25, 2020, in Minneapolis - Leila Navidi/Star Tribune
Anthony Land-Closson, 11, of Wheat Ridge, Colo., draws with chalk at the George Floyd memorial outside Cup Foods, Thursday, June 25, 2020, in Minneapolis – Leila Navidi/Star Tribune

“Our office is kind of the belly of the beast, and our business partner lives a couple of blocks away from ground zero… We serve a number of black-owned businesses that are still running Facebook ads. I’ll take the lead from them. I’d need to see more than just big brands coming on board to make a substantial change.”

Ultimately it is these businesses that can least afford to avoid Facebook, especially as they attempt to recover from lockdown.

“There’s no platform that matches Facebook right now for cost per click,” says Rymer. “There’s a lot of restaurants and small home service companies that we work with who wouldn’t even have the budget to do a Google campaign. You’re left with very few options.”

Damage control

So might Mark Zuckerberg simply tell the rebels to take a hike? Maybe not: senior executives have been busy fighting the fire, with advertising relations chief Carolyn Everson saying she had never spent so much time with Mr Zuckerberg in a single week. Facebook also put out a cheerful video attempting to keep customers on side.

Aho Williamson thinks a full snub is unlikely. “The Facebook of years ago would have been more cavalier,” she says, “and basically say ‘this is how we’re doing it, and if you don’t like it, that’s fine’.”

“But there has really been a change since Cambridge Analytica… they do seem to be at least striking the right tone of ‘we know what we need to work on’.

“The problem is that the list of things Facebook has to work on aren’t getting any shorter.”