More advertisers fleeing Facebook as boycott grows

A growing number of major advertisers are abandoning Facebook amid criticism the social media company is letting hateful or false posts go unchecked.

Chipotle, HP, Pfizer and Puma are the latest to pull their ads from Facebook. They join a list of major brands including Adidas, Clorox, Coca-Cola, Conagra, Denny's, Ford, Starbucks, Unilever and scores of smaller businesses that have halted advertising on the platform. A pledge by Mark Zuckerberg on Friday to label rule-breaking posts has done little to mollify advertisers. 

In all, more than 100 brands have pledged to boycott the social media giant, while prominent critics including Prince Harry and Meghan Markle have also thrown their influential weight behind the boycott, according to reports. 

The campaign also appears to have dented Facebook's stock. Its shares have dropped roughly 8% since the boycott started gaining steam last week, slashing $53 billion off the company's stock market value. 

Although Facebook has faced plenty of boycotts in the past, the latest campaign — spearheaded by leading civil rights groups such as the NAACP and the Anti-Defamation League — could have more staying power, analysts say.

"What's different this time is we have a bunch of significant large brands that are getting on board, and we have a number of large brands that are not getting on board with the boycott but taking action of their own beyond what the boycott asks for," said Nicole Perrin, principal analyst at eMarketer.

Take Unilever. The consumer goods giant, which owns brands including Dove, Hellman's and Lipton, said it would stop advertising on Twitter as well as Facebook and Instagram until at least year-end. Unilever cited "divisiveness" on the platforms in its announcement that it would remove its advertising, but did not mention the boycott campaign led by the civil rights groups. 

Neither did Coca-Cola, which is pulling all social ads for a month, nor Clorox, which promised to stay off Facebook until December. Similarly, Starbucks merely announced its intention to stand against online hate-speech, saying in part: "[Both] business leaders and policy makers need to come together to affect real change."

For Perrin, this is a sign that big brands could be getting uncomfortable with social media sites or user-generated content in general. 

Speaking of Unilever, she said, "I thought this was an example of a brand expressing discomfort with being in places where people are essentially expressing in free political discussion ahead of an election. There was no way that there wasn't going to be division."

Asking for total harmony on the platform "would be difficult to impossible for Facebook to deliver," she said, and would require "fundamental changes to the way user-generated platforms operate, and how much they allow people to say."

Bottom-line impact?

Big advertisers like Unilever — which spent just over $8 billion on marketing last year — as well as Clorox and Coca-Cola can help drive broader change in the media world.

But when it comes to Facebook, their exodus doesn't do much to affect its bottom line. More than 8 million advertisers use the platform, according to eMarketer. The top 100 advertisers on Facebook contribute just 6% of its revenue, according to Pathmatics data cited by analysts at Raymond James, and no advertiser is irreplaceable. 

"[S]ocial platforms are typically able to replace lost advertisers with other advertisers given the auction dynamics of the platforms," Aaron Kessler, an analyst with the investment bank, wrote in a note to investors.

There are other reasons for big-name brands to avoid social media, Perrin noted. For many well-known consumer brands, the ability to target niche groups that Facebook offers may not be as important as it would be to smaller businesses. And, because of the coronavirus pandemic, advertisers were already looking to cut spending.

Still, if there's a surefire way of getting Facebook's attention, vocal complaints by big advertisers rank high. Advertising still represents the vast majority of Facebook's revenue, and media reports indicate that senior executives at the company are working hard to keep ad buyers happy. The company's head of trust and safety policy recently acknowledged its "trust deficit," according to the Financial Times.

The campaigners have indicated that yanking U.S. ad spending is just a starting point. The CEO of Common Sense Media, one of the groups behind the Facebook ad boycott, told Axios the focus was shifting overseas, where many brands put their marketing dollars.