Facebook’s stock has taken a hit lately, and with good reason. Several large businesses have announced boycotts of Facebook because of their poor record on hate speech. A recent survey found a third of top US brands are planning to suspend their social media spending soon. That spending is of course not just limited to Facebook, but Twitter, and others as well. According to the World Federation of Advertiser’s, a trade body covering 90% of the world’s ad spending, the survey of 58 WFA members who account for $90 bn of ad spend worldwide found that combined with the one-third just mentioned, an additional 41% were still undecided about whether to pause campaigns. According to the CEO of the WFA, “In all candour, it feels like a turning point … What’s striking is the number of brands who are saying they are reassessing their longer-term media allocation strategies and demanding structural changes in the way platforms address racial intolerance, hate speech and harmful content”.
FINSUM: Hard to tell if this could be a sustained movement that could really hurt Facebook and other social media companies, or this will just be a few-week flash in the pan that will make no real difference. Our view is that the social media companies will respond strongly now that it is threatening revenue, and the advertisers will quickly fall back in line because the social media platforms are the bedrock of current customer acquisition strategies.