2 min read

What the Facebook Ad boycott means for small businesses

As most people will know, July saw a number of large Facebook advertisers pull their ad spend due to Facebook’s inaction towards monitoring the amount of “hateful content” on the platform.

What is the Facebook Ad boycott?

The boycott was set up by a collection of US civil rights groups in response to the growth in hate speech and political misinformation being spread on Facebook.

A number of these groups called on Facebook to make 10 changes to the platform and the company itself, which included hiring a top executive with a civil rights background, agreeing to undergo regular independent audits and updating its community standards. Representatives from these groups then had a (virtual) meeting with Mark Zuckerberg and chief operations officer Sheryl Sandberg, where it was announced that Facebook had addressed only one out of these 10 changes.

As part of the backlash after Facebook’s apparent unwillingness to address any of the further changes, organisers began urging businesses to pull their ad spend with the platform, while calling for the tech giant to address the “hate, bigotry, racism, antisemitism and violence” that remains prevalent. In total, over 1,100 companies joined the boycott.

What does the Facebook Ad boycott mean for Facebook?

Advertising makes up 98% of Facebook’s annual revenue, so a boycott would have the potential to hit the platform’s profits considerably with the right momentum. At the peak of the boycott, 80 of Facebook’s top 500 advertisers pulled their spend, including Ben & Jerry’s, Honda, Coca Cola and Unilever. For some insight into how big these losses really are, Unilever alone spent $8.2bn on Facebook marketing in 2019.

According to Forbes, the boycott is continuing past the original July deadline, with the organisers of Stop Hate For Profit saying that not enough is being done by Facebook to bring an end to the boycott. 

According to Facebook themselves, a post by Sheryl Sandberg claims that they are “making changes — not for financial reasons or advertiser pressure, but because it is the right thing to do.”

Did the Facebook Ad boycott make any difference to profits?

Despite the boycott, Facebook had a reasonably successful Q2. 

  • Revenue grew 11% through the period up to $18.7bn
  • Facebook shares grew by 5%
  • Forecasts for Q3 suggest a further 10% growth 
  • Users up 150 million in the quarter – with the COVID-19 pandemic leaving people needing alternative ways to stay connected with loved ones

Mark Zuckerberg reportedly informed investors that “the biggest part of our business is serving small businesses”. While large corporations have the resources to shift their spend from Facebook to expensive mass media buys for their prospecting (e.g. TV), smaller companies rely on Facebook’s lower cost to do a similar job promoting their business at scale to their target audience.

Zuckerberg has since announced two new initiatives for small businesses – Facebook Shops & in-messenger commerce, saying: “This really is primarily focused on small businesses, individual entrepreneurs. Small businesses are the biggest part of our business, not the large businesses.”

It’s true. Although the large businesses who took part in the boycott contribute a considerable amount towards Facebook’s profits, there are an estimated eight million advertisers on the platform. What’s more, with the big-name giants out of the way, these small businesses are reaping the rewards of reduced competition and costs.

What our experts say

It’s hard to think of anything that would stop Facebook’s success, as pound for pound it proves a great way to deliver scale on limited budgets. Whilst in recent years Facebook appears to have morphed from its original inception, it remains a hugely important way for people to stay connected in the digital world. As such, they remain an integral part of most companies’ advertising mix, and can effectively do as they please when it comes to the management of the platform.

Because of the sheer number of advertisers using Facebook as a marketing platform, the boycott is unlikely to make a huge difference to the company’s profits. Due to this, they are unlikely to rush through any changes in response to the calls from civil rights groups, especially coupled with Mark Zuckerberg’s claim of not wanting to limit “free speech” by introducing harsher censorship measures on the platform.

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