Big Brands Boycott Facebook Advertising

Video Transcript: Big Brands Boycott Facebook Advertising

Welcome to episode number 52 of The Great Reset. My name is Robert Brill and I'm the CEO of BrillMedia.co, an advertising firm that helps companies achieve results with the best paid media, data, and targeting available in the marketplace. The big news on Facebook over the last four days and a little bit longer has been big brands and their agencies are starting to boycott Facebook for advertising.

On Friday, Unilever announced they would halt U.S. Ads on Facebook and Twitter for the rest of the year over concerns about polarized politics. In prior days, brands including Eddie Bauer, Magnolia Pictures, Patagonia, North Face, and REI all vowed to stop advertising on Facebook.

Omnicom-owned ad agency Goodby Silverstein joined the boycott as well. Coca-Cola has announced that it will pause all Facebook and social media advertising starting July 1st. This pause will happen globally for at least 30 days.

This move in particular is a big deal because Coca-Cola spent in 2019 $4.25 billion in advertising globally. They have some weight to throw around by all means. This is all about divisive content and Facebook's stance on free speech.

Here are three reasons why this is particularly interesting to me. Number one, Facebook is in an unfortunate crosshairs. Conservatives accuse the platform of stifling conservative speech.

Liberals say that Facebook isn't doing enough to counter hate speech on the platform. Facebook is saying they don't want and should not be the arbiter of censorship in the U.S. And on this point, I definitely agree.

They are fully in the middle of a storm of people accusing the platform of doing both too much and too little. Number two, small business advertisers are dominant. There are officially 7 million advertisers on the platform, though I've heard from people talking about Facebook that it's over 8 million recently, which means that the long tail of advertisers are going to continue to power the company's ad spending.

So while one, two, or even 100 brands may make a difference on Facebook's bottom line, it won't nearly have the impact on revenues as I think these advertisers would like. At the end of the day, small businesses on Facebook, I think, are the driving force of the platform. Number three, the opportunity for the rest of us.

While big brands are boycotting Facebook, ads are going to continue to be the most effective way for many businesses that choose to stay on the platform. Facebook ads continue to have high click-through rates and conversion rates. And beyond just advertising outcomes, Facebook is a fantastic way, arguably the best way for consumers to give the brand real-time feedback in the form of engagement.

So while this makes the news, it's not going to fundamentally change the business. What has happened, though, is that a new feature has been turned on. Facebook has turned on a feature that will place a warning feature on posts that break its rules, but are considered newsworthy.

This is a tepid move, in my opinion, to pacify concerned advertisers. What this does is poke at the current establishment and creates the possibility of labeling Donald Trump's posts with a warning. Facebook, through a statement from Mark Zuckerberg on Friday, also said that ads will be more stringently reviewed for hate speech.

Specifically, Facebook will ban ads that reference specific groups of people that suggest a claim that a group of people are harmful to the physical safety or health of anyone else or everyone else. These groups include race, ethnicity, national caste, gender, sexual orientation, and immigration origin. So as a result of this boycott, Facebook's market capitalization has dropped $56 billion.

The company started the day on Friday at $235.68 per share and ended at $216.08 per share. This is a one-day drop of 8.4% on a day that the Dow Jones Industrial Average dropped 2.4%. So while that's a lot of money, Facebook's market cap at the end of Friday remains at a whopping $616 billion.

So while overall this is problematic, I believe Facebook will continue to be a leader in advertising revenue spent in 2020. This is bad news momentarily for Facebook, but small businesses will continue on the platform. Their stock won't take a hit, and the company will still be very important for the foreseeable future.

And when I say the stock won't take a hit, I mean in the long term. I think the stock is going to continue to rise. People are still talking about the stock going up to $300 per share.

And remember, as a business tool, Facebook is a democratizer. Anyone with an idea can get onto the platform, post content, buy ads, and have the possibility of growing a fantastic direct-to-consumer business. So as we've seen already, advertisers do have the ability to create change on the platform by pulling advertising dollars.

And they got some change from the platform, and this is going to continue into next week, into this week. But at the end of the day, I don't think this is going to be a massive change for the platform. But it does make good headlines.

That's it for this episode of The Great Reset. See you tomorrow.