Investors on Facebook ad defections: There’s ‘no other place to go'
Dozens of large companies have paused their advertising campaigns on Facebook (and Instagram) for July — and in some cases for the rest of the year. Among the biggest names: Starbucks, Clorox, Adidas, Reebok, and Coca Cola.
The reason? Brands are unhappy with Facebook’s responses to hate speech and misinformation on its platform.
The pressure has appeared to work, at least somewhat, so far, as the company agreed to an audit on Tuesday.
The campaign, called “Stop Hate for Profit,” is being organized by a handful of groups including the NAACP, Color for Change, and the Anti-Defamation League. ADL CEO Jonathan Greenblatt told Yahoo Finance that the measure was less about denting the company’s finances than causing a wave of public relations pressure, designed to appeal to its “conscience,” and compel the social networking giant to rethink its hands-off policies when it comes to problematic content.
The mission is gaining steam – and Facebook announced a new measure last week to label posts that are newsworthy but violate its rules.
Appealing to Facebook’s (FB) conscience – and not its pocketbook – is the right move, some market observers say.
"Facebook has had a lot of bumps in the road, but this too shall pass,” said James Cakmak, a partner at asset management firm Clockwise Capital. “There is no other platform that offers this scale and ROI other than Google.” In other words, there’s “no other place to go.”
Facebook’s business model is such that it can be a smart and viable option for small businesses advertising locally, because of the company’s ad targeting features. This makes it really durable because even without big-name companies advertising, the little guys will likely stay on the platform.
“The crux of the Facebook ad game is small business,” said Beth Egan, a professor of advertising at Syracuse University. “Big companies are important, but pulling out won’t have major impact.”
Another investor, Satori Fund fonder and portfolio manager Dan Niles, who owns a “fair Facebook position” that he recently added to, told Yahoo Finance that it’s important to realize Facebook’s top 100 advertisers — the big names — only account for 20% of its revenue and that it has 8 million advertisers.
“This isn’t the first effort at boycotts targeting Facebook and social media,” he said. “Facebook has kept going up through them.”
Still, Facebook may make some concessions and changes brought up by the organizers of the boycott — especially given the audit announcement. While it may not hurt the bottom line too much, that doesn’t mean that the campaign won’t hit some of its objectives.
Ethan Wolff-Mann is a writer at Yahoo Finance focusing on consumer issues, personal finance, retail, airlines, and more. Follow him on Twitter @ewolffmann.
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