Facebook Boycott Nears 200 Brands

Over 180 businesses and artists have decided to pull advertising on Facebook in July, according to one of the organizers of the "Stop Hate for Profit" movement. The running list of unfriending firms includes several big names like Verizon, Coca-Cola, UnileverUSA, The North Face, The Hershey Company, Starbucks Coffee, Patagonia, lululemon, Levi's and Honda. A few are halting advertising on other social media platforms as well as part of their hate speech boycott.

Facebook shares fell 8.32% on Friday and are flat in trading today. On Friday, CEO Mark Zuckerberg announced new policies to connect people with information about voting, crack down on voter suppression, and reduce/label hateful content.

It's unclear what the extent of the financial impact on Facebook will be. Pathmatics estimates the highest-spending 100 brands accounted for just $4.2 billion, or about 6%, of the platform's ad revenue last year. The movement may have to become broader and include smaller businesses that rely on social media before it really hurts the company's bottomline. One of the organizers, Common Sense Media, recently told Reuters the campaign will begin calling on major companies in Europe to join the boycott.

Almost all of Facebook's revenue comes from advertising on its platforms. Revenue was $70.70 billion in 2019, up 27% year-over-year. Growth has been a worry, however, and demand and pricing have also been affected by the COVID-19 business closures. Revenue for Q1 2020 rose 18% to $17.73 billion, Facebook's weakest quarterly growth as a public company. 

"After the initial steep decrease in advertising revenue in March, we have seen signs of stability reflected in the first three weeks of April, where advertising revenue has been approximately flat compared to the same period a year ago, down from the 17% year-over-year growth in the first quarter of 2020," it said in a press release. "The April trends reflect weakness across all of our user geographies as most of our major countries have had some sort of shelter-in-place guidelines in effect."