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Photo © Prykhodov | Source: Dreamstime.com
As the old saying goes, with great power comes great responsibility. Facebook has been forced to shoulder an enormous amount of responsibility in terms of not only how the data of its users is safeguarded, but also the promotional material and adverts those users are subjected to while they’re using the social media platform. In recent years we’ve seen the company subjected to heavy criticism and forced to pay heavy fines for failures in both regards. Even with all the bad press and the loss of the public’s trust in the platform, though, advertisers have never been put off using Facebook to engage with potential customers – until now. As you might have seen on the news, several high-profile brands and companies have decided to stop working with Facebook in an attempt to force changes in the social media company’s policies.
The first question to address here is why the brands are boycotting Facebook in the first place, and to answer that question, we have to look at a hashtag that first appeared on Twitter, #StopHateForProfit. It looks like an organic campaign, but it isn’t. It was started by a coalition of civil rights activist groups, including the NAACP and the Anti-Defamation League, who feel that Facebook hasn’t done enough to stop hateful messaging being spread across its platform. Specifically, the group is concerned about racism, religion-based discrimination, sexism, and prejudicial misinformation that they feel is allowed to circulate around Facebook unchecked. This isn’t the first campaign to raise such concerns, but it is the first to hit Facebook this hard in the pocket.
The first well-known company to announce that it had joined the campaign was The North Face. That seemed to lead to a chain reaction among ‘outdoor’ brands because REI and Patagonia almost immediately announced that they were also joining the boycott. Eddie Bauer took notice of this and, perhaps feeling that they would look bad if they were the only significant company within their industry not joining in, announced that they would also become part of the boycott a few days later. Act’teryx followed in their footsteps a day or so after that.
If it were just outdoor brands who were boycotting Facebook, it would be one thing, but announcements that advertising money is being withdrawn are now coming in from everywhere. Magnolia Pictures, a film studio that often advertises its forthcoming releases on Facebook, has stopped spending money. Recruitment company Upwork will no longer be seeking to reach recruits on Facebook. Ben and Jerry’s, arguably the world’s most popular ice cream company, has decided it won’t be spending another dollar with Facebook until things change either. It’s hard to know how much money this is likely to cost Facebook when everything’s taken into account, but it will easily reach several million dollars. It will probably be tens of millions of dollars. To almost any other company, this would be catastrophic, but unfortunately for the boycott and those supporting it, it almost certainly won’t harm Facebook’s finances one iota.
While it’s tempting to look at the withdrawal of big names from Facebook’s advertising platforms as a big deal, the reality is that Facebook works with over eight million regular advertisers. A dozen or so companies aren’t able to make a dent in that on their own no matter how large they are. The harsh reality of the advertising business is that some of their rivals will now see an opportunity to make gains in their absence, so they will spend more on Facebook advertising for the duration of the time that their opponents aren’t spending anything at all. If that has a measurable impact on customer numbers and revenue for any of their companies affected, the chances are that they’ll be back on Facebook again with their tails between their legs.
As a secondary point, Facebook has other ways of making money that don’t involve advertising. It owns several other companies, including Oculus VR, which makes the Oculus Rift headset. A little over a year ago, it decided it was going to get involved in the business of online slots. Since it became possible to create casino games like Jewel themed slots on the internet, online slots websites have grown in popularity to the point where they’re now, as an industry, worth almost fifty billion dollars per year. Facebook’s officially-approved High 5 online slots casino might not have claimed a significant slice of that money yet, but it may do in the future. Facebook sees online slots making money and decides to join in, just as it decides to join in whenever it sees any form of technology making money. Its revenue is mostly derived from advertising, but it’s not solely derived from advertising, and it’s likely that the company will try to make itself less ad-dependent in the future.
None of this means that the boycott is useless, though. The companies involved in it are probably aware that they’re making a symbolic gesture rather than an effective one, and that’s the whole point. Facebook won’t go bankrupt because Ben and Jerry’s isn’t spending money to advertise with it, but it does receive bad publicity when Ben and Jerry’s tell people the reasons why the boycott exists. The same goes for all the other companies involved in the boycott. They don’t want to push the social media company under; they want to apply so much pressure that Facebook takes action on hateful content. Based on the amount of publicity that’s already been generated, it’s likely that Facebook will change its stance on the issue, whether it’s losing out on money or not.