A Facebook ad boycott is gaining steam, but small business can’t just quit the social media giant so easily
A number of major apparel brands have promised to pull advertising money from Facebook Inc. as part of a coordinated campaign to pressure the social-media giant to crack down on hate speech and misinformation amid nationwide civil-rights protests and the lead-up to the 2020 U.S. presidential election.
Civil rights groups, including the NAACP, the Anti-Defamation League and Color of Change, launched the campaign last week, asking marketers to boycott Facebook ads for the month of July, an effort they’re calling Stop Hate for Profit. The group says that Facebook, which brings in almost all of its revenue from advertising, makes money off user posts that include hate speech, racism and misinformation.
A few large marketers were quick to jump on board. Outdoor apparel brand The North Face, owned by CF Corp., on June 19 tweeted “we’re out,” and confirmed to Bloomberg that it has pulled ad spending for both the main Facebook social network and its photo-sharing app Instagram until August. Recreational Equipment Inc., known as REI, which also sells sporting gear, and Upwork Inc., an online marketplace for freelancers, joined the boycott that afternoon. On June 21, Patagonia Inc. also pledged an advertising pause. On Tuesday, outdoor outfitter Arc’teryx said it would halt Facebook spending at least until the end of July, followed closely by popular ice cream maker Ben & Jerry’s Homemade Inc., part of Unilever NV.
The six companies have more than 19 million combined Facebook followers, and more than 13 million on Instagram. Still, many small businesses, which make up the bulk of Facebook’s advertisers, likely can’t afford to pause spending on the social network, their main online outpost for reaching local customers — a sign of the company’s strength in the digital ad market.
“We deeply respect any brand’s decision, and remain focused on the important work of removing hate speech and providing critical voting information,” said Carolyn Everson, vice president of Facebook’s Global Business Group.
For years, Facebook has been the target of politicians and nonprofit groups seeking to challenge the company’s power over user data and speech content. Despite previous ad boycott efforts, and a #deletefacebook trend online in early 2018, Facebook’s revenue and user growth numbers have never been seriously impacted by user or advertiser protests. Since 2016, when Facebook’s policies became the centre of debate following foreign interference efforts during the U.S. election, the social network’s revenue has jumped by 150 per cent to more than US$70 billion in 2019.
It’s possible the latest boycott will be the first to gain any real traction. Civil rights protests erupted in hundreds of cities across the country last month following the death of an unarmed Black man, George Floyd, at the hands of Minneapolis police officers. Many companies, including Facebook, have donated money and issued statements of support for racial justice groups. Juneteenth, the holiday celebrating the formal end of slavery in the U.S., was adopted widely as a corporate holiday by many companies for the first time this year.
“It’s obviously a cultural moment of pain,” said Steve Lesnard, VP of marketing at The North Face, who said the company made the decision in “hopes that Facebook will provide stricter rules.” But support of the boycott also signals support for groups that started it, like the NAACP. “We believe that normal is not good enough and we all need to drive positive change immediately,” Lesnard added.
Civil Rights groups have taken issue with Facebook for years. The Menlo Park, California-based social network enabled voter suppression efforts against African Americans in 2016, they say, and then named The Daily Caller, a right-wing outlet with ties to white nationalism, as one of its formal fact-checking partners. Most recently, Facebook left up posts from President Donald Trump threatening protesters that “when the looting starts, the shooting starts,” a phrase with ties to a pro-segregation presidential candidate.
Employees at Color of Change, a civil rights nonprofit helping lead the boycott, have phone calls set up with advertisers throughout this week in hopes of encouraging them to halt spending. “It’s not the time for statements of support that are just ‘Black Lives Matter’ and don’t come with real change,” said Jade Magnus Ogunnaike, the group’s senior campaigns director. “Now it’s time to change rules and behaviours.”
It’s unclear how much money any of the brands that committed to the boycott actually spend on Facebook advertising — for many national brands, Facebook ads are just a fraction of their overall marketing budgets — or if others will join them in holding back. While more large companies may pause spending, many small businesses, which make up the majority of Facebook advertisers, may not have that luxury. Shutting down Facebook advertising for a month, even for a cause they believe in, would pose a serious threat to online commerce brands in particular, many of which rely on Facebook ads to drive the bulk of their sales, according to multiple ad buyers.
Almost 76 per cent of Facebook’s advertising revenue comes from small- and medium-sized businesses — the kind that are unlikely to be in a position to spend a month off the platform — according to research from Deutsche Bank.
“They’re in the trenches, and they’re trying to hit their numbers,” said Terry Whalen, president of the digital marketing agency Sum Digital, which works with smaller e-commerce and direct-to-consumer brands. “If you talk about boycotting Facebook, to me that sounds like a fantastic idea to send a message. But for a whole month? That’s just too ambitious.”
Many smaller media buyers like Whalen — the kind who spend tens of millions of dollars per year on Facebook ads instead of hundreds of millions — first heard about the boycott from Facebook itself. The company sent its media partners an email last week acknowledging the boycott, and highlighting much of the work Facebook is doing around identifying hate speech using algorithms and defending election integrity, including a new goal to register 4 million voters ahead of the 2020 U.S. general election. “We remain open to meeting with any of these organizations and welcome feedback on the issues they have raised,” the email read.
Barry Hott, VP of growth at a software company for driving website sales called Thesis, manages over US$4 million in Facebook ad spending per month. He agrees that for many of his clients, Facebook is too valuable to give up. “A huge stream of their revenue is unfortunately tied directly to [Facebook] ads,” he said. “None of these clients can afford to do that.”
The dependence on Facebook has been part of a broader industry discussion in recent years about the immense power of major technology companies. Facebook alone accounts for 23.4 per cent of the entire U.S. digital advertising market, according to EMarketer, and more than 50 per cent of the market is controlled by Facebook and Alphabet Inc.’s Google. Not coincidentally, numerous U.S. regulators are investigating the tech industry’s largest companies for antitrust reasons.
Facebook investors, meanwhile, don’t seem concerned that some big brands are throwing their names and their dollars behind the boycott. Deutsche Bank’s Lloyd Walmsley, an analyst covering Facebook, said that while he’s heard from many advertisers worried about marketing on social media given the current environment surrounding the protests, he doesn’t anticipate Facebook suffering any kind of long-term business harm. “Looking beyond the very short term, I think this will end up being a speed bump,” he says.
Facebook stock closed Tuesday at US$242.24 a share, an all-time high.
“I don’t suspect that a month-long call to boycott is going to be successful,” said Whalen. “Facebook is too important.”