DTC’s Favorite Platform, Facebook, Loses Advertisers to Boycotts
Instagram parent company Facebook has recently lost several prominent brands
Over the course of the past month, some of Facebook’s biggest advertising customers announced that they would stop or pause their marketing efforts on Mark Zuckerberg’s social networks Facebook and Instagram.
The #StopHateforProfit campaign
Mark Zuckerberg has come under fire in past years for policies that criticizers say “allowed incitement to violence against protesters.” The controversy involving tech platforms, free speech, and laws like Section 230 has come to a head after the killing of George Floyd and with it, national protests and conversations. Now, the role of social media companies in deciding what type of communication is allowed on their sites in up for debate.
Stop Hate for Profit is a coalition of several organizations like the Anti-Defamation League (ADL) and the National Association for the Advancement of Colored People (NAACP) wanting Facebook to revise its platform’s rules.
On June 17, Stop Hate for Profit “asked businesses to temporarily pause advertising on Facebook and Instagram in order to force Mark Zuckerberg to address the effect that Facebook has had on our society.”
Many nationally-known businesses joined the boycott in late June with press releases and tweets:
In addition to Ben & Jerry’s and Patagonia, companies ranging from Adidas and Clif Bar & Company to software makers InVision and Palo Alto Software are also included in the ad-spend pause. Popular direct-to-consumer brands like Birchbox and The Bouqs Company are also engaging. Here is the full list of participating businesses on Stop Hate for Profit’s website.
Effect on Facebook
While the lion’s share of Facebook’s advertising revenue (76% according to Deutsche Bank) is from small- to medium-sized businesses, the boycott is definitely costing the social media giant. The Wall Street Journal estimated that the top eight biggest boycotters spent almost $60 million on ads in the U.S. May 2020, compared with over $500 million from the top 100 advertisers in May:
Facebook’s (FB) stock is up 3.4 percent since June 17.
If more advertisers pause spending, this would most likely drive down rates for DTC startups who have faced extremely high customer-acquisition costs in recent years. Business Insider reports that brands like Harry’s and Daily Harvest were still advertising on Facebook’s properties as of July 2.
If Facebook does not change its policies and more companies stop spending money on its advertising products, media sites like Twitter—which hasn’t been a popular platform for so-called “Instagram” brands due to it’s text-based offering—may become the go-to provider because of its healthy tech and startup communities. Zuckerberg and Facebook COO Sheryl Sandberg met with representatives of ADL and NAACP on Tuesday to discuss steps it’s taking, including hiring for a civil rights role.