The hard truth about the Facebook ad boycott: Nothing matters but Zuckerberg

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The hard truth about the Facebook ad boycott: Nothing matters but Zuckerberg

 

(CNN)For years, Facebook (FB) has been viewed as one of the only truly indispensable digital advertising platforms for big and small businesses looking to reach the social network's vast audience. Even as the company lurched from one controversy to the next, and endured viral hashtags calling for users to delete the app, its advertising machine kept churning out money, making Facebook seem all but unstoppable.

 

But in recent days, Facebook has looked a little less invincible. The social network is confronting a new pressure campaign from advertisers unlike anything in its recent history. A growing number of big household names has joined a Facebook advertising boycott over its handling of hate speech and misinformation, culminating on Friday with the news that home goods giant Unilever would halt ad spending for at least the remainder of the year on Facebook, as well as Twitter (TWTR). The move was enough to tank both companies' stocks and prompt speculation of a possible domino effect among large advertisers.

 

Unilever's decision illustrates how quickly an ad boycott that began with socially conscious lifestyle brands, such as The North Face and Patagonia, has spread to some of the world's largest corporations. The #StopHateForProfit campaign, which launched in the wake of Facebook's decision not to take action on incendiary posts from President Donald Trump, is now a force Facebook cannot ignore.

 

In the past week, the company held a conference call to tell marketers it's working to close a "trust deficit." It sent out multiple emails to advertisers in hopes of containing the revolt. And on Friday, Zuckerberg himself addressed the public with new promises to ban hateful ads and label controversial posts from politicians. But despite the mounting pressure, Zuckerberg, the one person with the most power to decide what the company does next, did not address the boycott, a decision that may only strengthen his critics' resolve.

 

"Zuckerberg's address was 11 minutes of wasted opportunity to commit to change," tweeted Rashad Robinson, president of the civil rights group Color of Change, one of the boycott's organizers.

 

In the weeks since Facebook decided not to take action on a series of controversial Trump posts — including one during the racial justice protests that said "looting" would lead to "shooting" — the company and its CEO have faced pushback from employees, politicians and even scientists backed by Zuckerberg's philanthropic organization. But more than any of these other protests, the advertiser boycott could pose a deeper threat to Facebook and its core business. Nearly all of Facebook's roughly $70 billion in annual revenue last year came from advertising dollars.

 

A significant chunk of that came from big brands, said Laura Martin, an industry analyst at Needham & Co. — and big brands have only become more vital to

Facebook as smaller advertisers scale back or go out of business due to the pandemic.

 

Facebook did not immediately respond to a request for comment. In a statement Friday after Unilever's announcement, Facebook stressed the steps it's taken to protect its platform, including banning hundreds of white supremacist organizations and investing in artificial intelligence to find and crack down on harmful content.

 

"We invest billions of dollars each year to keep our community safe and continuously work with outside experts to review and update our policies," said company spokesman Andy Stone. "We know we have more work to do, and we'll continue to work with civil rights groups, GARM, and other experts to develop even more tools, technology and policies to continue this fight."

Facebook may be vulnerable, but Zuckerberg is not

As each new company lends its weight to the boycott, the economic pressure is growing on Facebook to change — somehow. The campaign carries echoes of a similar advertiser rebellion against YouTube in 2017. Then, as now, major household names announced one by one that they would reject YouTube's platform over concerns that its algorithms were placing ads beside hate speech. And ad executives say it led to some changes, including more controls to prevent ads from appearing beside controversial content.

 

Despite some similarities, Facebook is less susceptible to outside pressure than most businesses, experts say. It's led by a CEO, Mark Zuckerberg, who exercises complete voting control over the company and can't be removed by shareholders. And that could vastly complicate the campaign to hit Facebook where it hurts.

 

"Disney couldn't do this, and Apple couldn't do this. They're run by committee," Martin said. "If it was a company run by committee, they would have to react, because the committee — the board of directors — would be threatening to fire the CEO to protect revenue. That doesn't have to happen here."

 

Indeed, Facebook appeared to strike a defiant tone earlier in the week. "We do not make policy changes tied to revenue pressure," Carolyn Everson, Facebook Vice President of Global Business Group, wrote in an email to advertisers this week obtained by CNN. "We set our policies based on principles rather than business interests."

 

Whether the boycott will even have a measurable impact on Facebook's bottom line still remains very hazy. That's partly due to the number of participating brands, the timing of the campaign, and ambient factors such as the pandemic that may make it challenging to link any potential dip in Facebook revenue directly to the boycott. Additionally, there are few alternatives in reaching audiences the size Facebook can offer, along with a nearly unmatched data trove for ad targeting. The earliest any impact could become apparent will be when the company reports its third quarter earnings results this fall.

 

Of the companies that have joined the boycott so far, only three — Unilever, Verizon and the outdoor equipment retailer REI — rank among the top 100 advertisers on Facebook, according to data compiled by Pathmatics, a marketing intelligence firm. In 2019, Unilever ranked 30th, spending an estimated $42.4 million on Facebook ads. Verizon and REI were 88th and 90th, respectively, spending an estimated $23 million each.

 

The highest-spending 100 brands accounted for $4.2 billion in Facebook advertising last year, according to Pathmatics data, or about 6% of the platform's ad revenue. Topping the list were Home Depot (HD), Walmart (WMT), Microsoft (MSFT), AT&T (T) (which owns WarnerMedia, CNN's parent company) and Disney (DIS).

 

Much of the rest of Facebook's ad revenue comes from small and medium-sized businesses, ad executives say. It would likely take tens of thousands of them, acting over a significant period of time, to put a big dent in Facebook's bottom line.

The uncertain road ahead

Since the #StopHateForProfit campaign asks for businesses to pause advertising only during the month of July, companies that stick narrowly to the campaign will only deny revenue to Facebook for a matter of weeks. That may show up as barely a blip, if at all, in Facebook's quarterly earnings, said Nicole Perrin, principal analyst at the market research firm eMarketer.

 

Nancy Smith, president of the advertising consulting firm Analytic Partners, said a driving factor for many of the participating companies is "brand safety" — the desire for their advertisements not to show up beside conspiracy theories or hateful rhetoric. As they stop investing in Facebook and Instagram, she said, many marketers will redirect those dollars. Unilever said Friday it would be shifting its own US digital ad budget to other platforms.

 

"For our clients, we would advise them to reallocate those funds," said Smith. "Reallocating to other social media, potentially; reallocating to other digital publishers; reallocating to linear TV; reallocating to platforms like Hulu."

 

Then there's the pandemic, which has already driven a slowdown in the digital advertising industry this year. Companies scaled back dramatically on ad spending in March and April, and some, like Verizon and Patagonia, were just beginning to reinvest in Facebook ads when #StopHateForProfit began, according to Pathmatics' research.

 

As Covid-19 infection rates begin spiking again nationwide, it's going to be "extremely difficult to tease out" the reasons behind any slump in advertising numbers, Perrin said.

 

"It's going to be a very political argument where folks on the boycott side will want to say they had an effect, whereas those on the other side will say the boycott didn't really work," said Perrin. "It'll be tough."

 

Until Zuckerberg himself decides to change the limits of free expression on his platform, Facebook may simply lose brands until only those that don't object to the company's conduct or who cannot survive without the platform's reach are left, Martin said.

 

In that future, it would be hard to say whether the boycott truly "worked."

 

CNN

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Facebook announces policy changes ahead of 2020 elections

 

Three weeks ago, I committed to reviewing our policies ahead of the 2020 elections. That work is ongoing, but today I want to share some new policies to connect people with authoritative information about voting, crack down on voter suppression, and fight hate speech.

 

The 2020 elections were already shaping up to be heated -- and that was before we all faced the additional complexities of voting during a pandemic and protests for racial justice across the country. During this moment, Facebook will take extra precautions to help everyone stay safe, stay informed, and ultimately use their voice where it matters most -- voting.

 

Many of the changes we're announcing today come directly from feedback from the civil rights community and reflect months of work with our civil rights auditors, led by noted civil rights and liberties expert Laura W. Murphy and Megan Cacace, a partner at the respected civil rights law firm of Relman & Colfax. Facebook stands for giving people a voice -- especially people who have previously not had as much voice or power to share their experiences.

 

1. Providing Authoritative Information on Voting During the Pandemic

 

Last week, we announced the largest voting information campaign in American history, with the goal of helping 4 million people register to vote. As part of this, we're creating a Voting Information Center to share authoritative information on how and when you can vote, including voter registration, voting by mail and early voting. During a pandemic when people may be afraid of going to polls, sharing authoritative information on voting by mail will be especially important. We'll be showing the Voting Information Center at the top of the Facebook and Instagram apps over the coming months.

 

In the midst of Covid, we're also focused on preventing new forms of potential voter suppression. For example, if someone says on Election Day that a city has been identified as a Covid hotspot, is that voter suppression or simply sharing health information? Because of the difficulty of judging this at scale, we are adopting a policy of attaching a link to our Voting Information Center for posts that discuss voting, including from politicians. This isn't a judgment of whether the posts themselves are accurate, but we want people to have access to authoritative information either way.

 

2. Additional Steps to Fight Voter Suppression

 

In 2018, we updated our policies to ban any content that misleads people on when or how they can vote. We're now tightening these policies to reflect the realities of the 2020 elections.

 

Since the most dangerous voter suppression campaigns can be local and run in the days immediately before an election, we're going to use our Elections Operations Center to quickly respond and remove false claims about polling conditions in the 72 hours leading into election day. Learning from our experience fighting Covid misinformation, we will partner with and rely on state election authorities to help determine the accuracy of information and what is potentially dangerous. We know this will be challenging in practice as facts on the ground may be uncertain and we don't want to remove accurate information about challenges people are experiencing, but we're building our operation to be able to respond quickly.

 

We will also ban posts that make false claims saying ICE agents are checking for immigration papers at polling places, which is a tactic used to discourage voting. We'll also remove any threats of coordinated interference, like someone saying "My friends and I will be doing our own monitoring of the polls to make sure only the right people vote", which can be used to intimidate voters. We will continue to review our voter suppression policies on an ongoing basis as part of our work on voter engagement and racial justice.

 

3. Creating a Higher Standard for Hateful Content in Ads

 

This week's study from the EU showed that Facebook acts faster and removes a greater percent of hate speech on our services than other major internet platforms, including YouTube and Twitter. We've invested heavily in both AI systems and human review teams so that now we identify almost 90% of the hate speech we remove before anyone even reports it to us. We've also set the standard in our industry by publishing regular transparency reports so people can hold us accountable for progress. We will continue investing in this work and will commit whatever resources are necessary to improve our enforcement.

 

We believe there is a public interest in allowing a wider range of free expression in people's posts than in paid ads. We already restrict certain types of content in ads that we allow in regular posts, but we want to do more to prohibit the kind of divisive and inflammatory language that has been used to sow discord. So today we're prohibiting a wider category of hateful content in ads. Specifically, we're expanding our ads policy to prohibit claims that people from a specific race, ethnicity, national origin, religious affiliation, caste, sexual orientation, gender identity or immigration status are a threat to the physical safety, health or survival of others. We're also expanding our policies to better protect immigrants, migrants, refugees and asylum seekers from ads suggesting these groups are inferior or expressing contempt, dismissal or disgust directed at them.

 

4. Labeling Newsworthy Content

 

A handful of times a year, we leave up content that would otherwise violate our policies if the public interest value outweighs the risk of harm. Often, seeing speech from politicians is in the public interest, and in the same way that news outlets will report what a politician says, we think people should generally be able to see it for themselves on our platforms.

 

We will soon start labeling some of the content we leave up because it is deemed newsworthy, so people can know when this is the case. We'll allow people to share this content to condemn it, just like we do with other problematic content, because this is an important part of how we discuss what's acceptable in our society -- but we'll add a prompt to tell people that the content they're sharing may violate our policies.

 

To clarify one point: there is no newsworthiness exemption to content that incites violence or suppresses voting. Even if a politician or government official says it, if we determine that content may lead to violence or deprive people of their right to vote, we will take that content down. Similarly, there are no exceptions for politicians in any of the policies I'm announcing here today.

 

Overall, the policies we're implementing today are designed to address the reality of the challenges our country is facing and how they're showing up across our community. I'm committed to making sure Facebook remains a place where people can use their voice to discuss important issues, because I believe we can make more progress when we hear each other. But I also stand against hate, or anything that incites violence or suppresses voting, and we're committed to removing that no matter where it comes from.

 

We're continuing to review our policies, and we'll keep working with outside experts and civil rights organizations to adjust our approach as new risks emerge. I'm optimistic that we can make progress on public health and racial justice while maintaining our democratic traditions around free expression and voting. I'm committed to making sure Facebook is a force for good on this journey.

 

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