Facebook's ad boycott is starting to shake up investors

0
39



Actions of Facebook (full board) It fell almost 3% in the first operations on Monday, before recovering, after major brands such as Starbucks (SBUX), Coca Cola (CCEP) And Hershey & # 39; s said they would pause spending on the social media platform over concerns about their handling of disinformation and hate speech.
The drop comes after Facebook shares closed 8% on Friday on the news that Unilever, the massive household goods company, would stop advertising on Facebook and Twitter (TWTR) for the rest of the year. (Twitter shares saw a similar decline on Friday.)

The stock movements highlight new uncertainty about how much the Facebook ad sales machine could boycott. Much of Facebook's advertising revenue comes from small and medium-sized businesses, which can isolate it from an excessive revenue deficit from the boycott. But some brands such as Starbucks are high on the list of those who spend the most on Facebook advertising, according to estimates by Pathmatics, a market intelligence firm.

"Facebook needs to address this issue quickly and effectively to prevent ad outs from spiraling out of control," said Bradley Gastwirth, chief technology strategist at Wedbush Securities.

A civil rights coalition that includes the Anti-Defamation League (ADL) and NAACP launched the #StopHateforProfit campaign earlier this month, urging big corporations to stop advertising on Facebook. for the month of July, due to "the platform's repeated failure to meaningfully address the large proliferation of hate on its platforms."

Outdoor brands, including The North Face and REI, were among the first to join the lobbying campaign. But since then, a long list of familiar names, including Sling (HMC), Levi Strauss (LEVI), Verizon (VZ) And, starting Monday, Denny & # 39; s – have followed suit. Some brands, such as Starbucks and Unilever, chose to go beyond the scope of the campaign by rethinking spending on social media platforms, not just Facebook.
In CNN's "Trusted Sources" on Sunday, Facebook Vice President of Public Affairs Nick Clegg rejected the boycott premise and said the social media giant is not profiting from the proliferation of hate speech on its platform.

"We have no incentive to tolerate hate speech," Clegg told CNN's Brian Stelter. "We don't like it, our users don't like it, advertisers understandably don't like it … We benefit from positive human connection, not hate."

Last week, Facebook made a conference call with vendors who recognized a "confidence deficit" and sent multiple emails to advertisers in an effort to stem the revolt. On Friday, CEO Mark Zuckerberg promised to ban hate ads and tag controversial posts from politicians.

Nicole Perrin, principal analyst at research firm eMarketer, said it will be difficult to "analyze" the effects of the boycott from the impact of the pandemic on Facebook's results. Some brands, he said, had already paused advertising spending due to the pandemic. Meanwhile, other advertisers stepped in to fill the gap and take advantage of the cheaper prices.

CNN's Brian Fung contributed to this report.

LEAVE A REPLY

Please enter your comment!
Please enter your name here