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Facebook ad boycott: ‘It’s not going to do anything to the company financially’

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The growing boycott by companies of Facebook’s ads because of the social media giant’s handling of hate speech and violence will have little impact on its business, analysts said.

“It’s not going to do anything to the company, financially,” said Brent Thill, an analyst at investment banking firm Jefferies. “You have 8 million advertisers. If a handful leave, there’s a short-term air pocket, but it’s minor.”

The movement was started last week by advocacy groups including the Anti-Defamation League, the National Association for the Advancement of Colored People, and Common Sense Media. They asked businesses to pause their advertising on Facebook in July to send a “powerful message” to Facebook: “Your profits will never be worth promoting hate, bigotry, racism, antisemitism and violence.”

So far, more than 10 companies, including REI, Patagonia, and Unilever’s Ben & Jerry’s, have joined the campaign. “Facebook, Inc. must take the clear and unequivocal actions to stop its platform from being used to spread and amplify racism and hate,” Ben & Jerry’s tweeted on Tuesday after joining.

In a statement, Facebook responded to the boycott: “We respect any brand’s decision, and remain focused on the important work of removing hate speech and providing critical voting information,” said Carolyn Everson, vice president of Facebook advertising. “Our conversations with marketers and civil rights organizations are about how, together, we can be a force for good.”

The boycott follows Facebook’s decision to leave several of President Trump’s inflammatory posts on its service. In them, Trump said “when the looting starts, the shooting starts,” in reference to the Minneapolis protests against racial injustice, and threatened “serious force” if anyone tried to set up an autonomous zone for protesters in Washington, D.C..

Facebook argued that Trump’s comments didn’t violate its policies, prompting public backlash and criticism by the company’s own employees.

Now some advertisers are taking a stand against Facebook and demanding that it do more. But the impact on Facebook’s revenue is expected to be limited, if there’s any impact at all.

For one thing, Facebook’s auction-based ad system can quickly fill ad space with marketing messages from other companies. Furthermore, the boycott is only supposed to be temporary.

The movement “would have to get hundreds, if not thousands of advertisers to join in order for there to be any real impact,” said Colin Sebastian, an analyst at investment bank Baird. “A boycott like this is much more symbolic.”

Michael Levine, an analyst at financial research firm Pivotal Research Group, said advertisers recognize that Facebook has a big impact on their sales. And so many advertisers are unlikely to join the movement, and if they do, it would be brief. “This is their way of saying I’m not cool of what you’re doing,” he said. “But … not to the point that I’m going to blow my business up.”

Mark Shmulik, an analyst at brokerage firm AB Bernstein, said the companies that joined the movement will likely have a very tough decision to make in August, when the boycott is supposed to end. “If Facebook makes no incremental changes, I’m curious what the brands’ next move is,” he said. If they just switch ads back on “that’s being somewhat disingenuous. If they’re willing to hold out, it becomes more interesting.”

Shmulik also said he’s hearing that ad agencies, which manage the campaigns for corporate clients, are informing those clients about the ban, either encouraging them to join or telling them it’s an option. While that may or may not increase participation in the movement, it could create peer pressure if they see a number of their competitors participating.

This isn’t the first time that advertisers and the public have tried boycotting Facebook. And in the previous cases, those boycotts caused little lasting change, analysts said.

For example, in 2018 companies including Mozilla and wireless speaker maker Sonos pulled their ads from Facebook after discovering it had left millions of users’ personal information vulnerable to Cambridge Analytica, a data analytics company that vacuumed the personal information of millions of Facebook users.

Users also lashed out over the incident by creating the hashtag #DeleteFacebook to encourage others to quit Facebook. But users and revenue continued to grow.

“This is not a new dynamic for Facebook,” Sebastian said. “Advertisers announce they’re leaving the platform for various reasons. Based on historical patterns, we wouldn’t expect much of an impact.”

Working in Facebook’s favor is that it collected $70.7 billion in revenue last year, meaning any ad boycott would have to be huge to make a dent. Additionally, its executives know that the service still provides ad customers with some of the highest returns in digital advertising, said Thill of Jefferies.

“At the end of the day, they are running this as a for profit business,” he said. “There is a $700 billion ad market heading toward becoming a trillion-dollar market that they’re vying for. That’s their true north.”

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