Advertiser boycott on Facebook starts shaking investors

Why is Facebook facing a boycott? 1:31 (CNN Business) –– After several days of largely ignoring the news of a growing boycott of Facebook advertisers, investors now seem to be paying attention. Facebook shares fell almost 3% during the first operations on Monday ––before recovering––, after big brands such as Starbucks, Coca-Cola and Hershey’s reported that they would suspend their spending on the social media platform due to concerns about handling disinformation and hate speech. The drop comes after Facebook shares closed 8% lower on Friday, on the news that Unilever, the massive household goods company, would stop its advertising on Facebook and Twitter for the rest of the year. (Twitter shares also experienced a similar decline on Friday.) The moves in the stock highlight new uncertainty about how much the boycott could affect Facebook’s ad sales machine. Much of Facebook’s advertising revenue comes from small and medium-sized businesses, potentially isolating it from an excessive revenue deficit following the boycott. But some brands such as Starbucks are high on the list of those who spend the most on Facebook advertising, according to estimates by Pathmatics, a market intelligence firm. Multiple Brands Vow to Boycott Facebook 0:52 “Facebook needs to address this issue quickly and effectively to prevent ad withdrawals from potentially spiraling out of control,” said Bradley Gastwirth, chief technology strategist at Wedbush Securities. A civil rights coalition – which includes the Anti-Defamation League (ADL) and the National Association for the Advancement of People of Color (NAACP) – launched the #StopHateforProfit campaign to Earlier this month, which calls on large corporations to stop advertising on Facebook during the month of July, due to the platform’s “repeated failure” to meaningfully address the huge proliferation of hate. ” Outdoor clothing brands, including The North Face and REI, were among the first to join the lobbying campaign. But since then, a long list of recognized names – like Honda, Levi Strauss, Verizon and, since Monday, Denny’s – have followed suit. Some companies, such as Starbucks and Unilever, chose to go beyond the scope of the campaign by rethinking spending on social media platforms, not just Facebook. On CNN’s “Reliable Sources” show this Sunday, Facebook’s vice president of public affairs, Nick Clegg, rejected the boycott premise, saying the social media giant is not profiting from the proliferation of hate speech on its platform. . “We have no incentive to tolerate hate speech,” Clegg told CNN’s Brian Stelter. “We don’t like it, our users don’t like it, the advertisers understandably don’t like it … We benefit from positive human connection, not hate,” he insisted. Last week, Facebook made a call with marketing specialists acknowledging a “confidence deficit,” and sent multiple emails to advertisers in an effort to curb the boycott. On Friday, Chief Executive Mark Zuckerberg promised to ban hate ads and tag controversial posts from politicians. Nicole Perrin, principal analyst at research firm eMarketer, said it will be difficult to “analyze” the effects of the boycott from the impact of the pandemic on Facebook’s results. Some brands, he explained, had already suspended advertising spending due to the pandemic. Meanwhile, other advertisers stepped in to fill the gap and take advantage of cheaper prices. CNN’s Brian Fung contributed to this report.