DIRECT MEDIA United Solutions
Author: Andjela Cvetković, Digital Quality Manager, DIRECT MEDIA United Solutions
Advertisers are increasingly joining the advertising boycott campaign against Facebook every day. The company’s stocks took a downswing of several billion dollars, while Mark Zuckerberg’s personal net worth also dropped by billions. How is this going to affect the platform’s prescribed policies? Will this initiative — which comes after many — be the one to strike a permanent blow to Facebook, or will it turn out just another drop in the ocean of thunderstorms that Facebook flies through?
What started all this?
In May, Minnesota police killed an unarmed African American man named George Floyd during his arrest. The whole world has seen his killing in a harrowing video. The officer in question was Caucasian. The incident set off a train of civil protests calling for racial justice. The protesters rallied behind the motto Black Lives Matter, which is also the name of the movement started in 2013 with a view to protesting and advocating against racism. The protests started out peaceful but quickly escalated into outright violence.
Trump wrote a tweet that added fuel to the already raging fire. It read, “Just spoke to Governor Tim Walz and told him that the Military is with him all the way. Any difficulty and we will assume control but, when the looting starts, the shooting starts.” What did Twitter do? The platform flagged the tweet for “glorifying violence” and hid it from the account’s feed. What did Facebook do? Nothing. Absolutely nothing. More than nothing. Facebook issued a statement explaining that the tweet was partly of informative nature concerning the National Guard and the government’s intended action, which is why it wasn’t taken down. Trump’s tweet is merely the tip of the iceberg of groups, comments, status updates, and pages that promote violence, hate speech, fake news, and misinformation. The lack of action resulted in the #StopHateforProfit initiative, better known as the advertising boycott. The Hit Pause on Hate campaign has drawn more than 500 companies so far, and the number is climbing daily.
What companies joined the boycott, and can they really make a difference?
The list of companies taking part in the boycott is growing day after day. Among those that stepped up to support the boycott are Adidas, Coca Cola, Dunkin’, Ford, Honda, HP, Lego, Levi Strauss, Microsoft, Puma, The North Face, Sony, Starbucks, Target, Upwork, Unilever, Verizon, Walmart… All of them are big players in their respective categories, captains of industry that dictate trends and count among top advertisers. And they implement their decisions globally — even in our country. We could classify all these companies under some form of brand advertising. In addition to selling the product at some future time, they also sell what the product represents — a good feeling of sorts. On the other side of the spectrum are the advertisers that seek immediate action, like instantly downloadable mini-games or direct sales. According to Facebook, the platform has more than eight million active advertisers. When looked at in this light, figures of 500 or 1,000 seem not too significant, even if they include the biggest advertisers. It would be a bit naive to interpret their joining the boycott campaign as actually an elegant way out of budget cuts, to say nothing of free PR. Budgets get modified, activated, cut off, reallocated, and delayed even in the ordinary course of business with no crisis in sight. For most of these companies, advertising on Facebook represents their highest performing channel. However, given that the momentum is not quite slowing down and the number of involved companies is growing, Facebook is forced to combat more than bad PR and actually take more decisive action because just three of the listed companies spend in excess of $100 million annually, most likely affecting their competitors’ spending twice as much.
Who was first and does that really matter?
Seeing that the boycott is an ever-expanding phenomenon that is unlikely to die down any time soon, it’s hard to pin down which company was the first to take the plunge and withdraw advertising. Some sources claim it was The North Face, others that it was Microsoft. Essentially, it doesn’t matter who was the first when the number of major advertisers on the boycott list is growing day after day. Some withdrew their ads for the following month, some for the entire year, and some for good. So, what does matter? What matters is the reason behind it. And the reason is the future. Companies are aligned with #StopHateforProfit in terms of accountability, decency, and support. Companies do not want to fund violence, hate speech, fake news, or misinformation. Many will roll their eyes over these being commonplace. I can agree in part, but in order for companies to be aligned with values in the long run, they have to do well. In order to do well, they have to make profit. In order to make profit, they have to sell. In order to sell, someone needs to buy. We already know all this. Well, therein lies the catch. When I ask who buys the product, the most common response is EVERYONE. Although we know that this isn’t exactly a real answer, let’s assume that it is true. Everyone is not the same. Everyone contains many different subgroups that have their own specificities, beliefs, convictions, intentions, and habits. If we look at the generational demographics, each of the principal groups (boomers, Gen X, millennials, Gen Z) is one segment of the customers. However, in five, ten, or fifteen years, the dominant buyers will be millennials and Gen Z. Edelman confirms that 60% of Americans maintain that they would buy or boycott a brand depending on how the brand responds to ongoing protests. Future customers are even more radical and research shows that 83% of millennials want brands to be aligned with their values. This requirement is probably even more prevalent with Generation Z. Although they are not active purchase decision makers yet, they will be very soon. And when that happens, companies that don’t share their values have nothing to offer them, let alone sell them.
How deep in the red is Facebook because of the boycott?
The last financial report published by Facebook pertains to the first quarter of 2020. In Q1, Facebook’s total generated revenue stood at $17.737 billion. Of that, $17.440 billion came from advertising. That makes 98.3% of the total revenue. Compared with the same period last year, the company saw a 17% growth. Although the financial report for the second quarter is not yet available, back in April Facebook was predicted to take a hit just like any other business on account of the coronavirus pandemic. However, since the boycott started gaining significance and more and more companies joined in, Facebook started to lose money. On June 26 alone, the day after Unilever announced it was joining the boycott, Facebook’s stocks fell by 8.3%, which translates to $56 billion, according to Bloomberg. The figure is indeed staggering, but only ten days later Facebook started recovering. You can see this on the chart tracking the stock market.
What steps has Facebook taken so far?
The chart clearly shows that Facebook recovered its losses. The fact is that money can be recovered, but trust is very difficult to reclaim. Now Facebook must battle on two fronts. One pertains to the boycott, and the other to losing more conservative users whom the platform is unable to bring back in the long run. The end of June saw deletion of more than 400 accounts and over 500 groups and pages associated with Boogaloo only. On average, it took them 4.8 days to detect the accounts. This prompts the question of whether — under the pretext of freedom of speech and freedom of information — the company deliberately ignored the accounts, pages, and groups that openly support or promote violence, anti-Semitism, white supremacy, and the like. Furthermore, the platform launched the Voting Information Center to provide additional information, and any election-related content will be flagged and referred to the Center. In addition, the flagging will also apply to posts that are informative in nature.
On the other hand, the fight for more conservative users is long-term as big an issue as the fight to end the boycott. Boycotting on two fronts is hard work. In case you haven’t seen it yet, Parler has been gaining traction around this issue. The social media platform was launched in August 2018 as an alternative to Twitter that is especially appealing to conservatives in the US. Alexa ranks it 1,140 in the United States. The spot is not particularly high, but their visits have grown by 842% since the end of May. The company itself reported that their number of users climbed from 100,000 in May to 1.5 million in June. This is a major bleed and a potentially big loss of a massive audience that can be targeted with ads, which in the long run means a bigger blow than the downslide in price of stock.
A recommendation in place of a conclusion
I don’t know when the ad boycott will come to an end. Will it change some policies and speed up response? I sincerely hope so. So, what can we do until then? We can focus on our own channels (owned media) and build relationships with customers — be there for them, help them, understand them, pamper them, take care of them, and proudly enjoy the fruits of our labor. That is the only thing that no one can stop.