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FACEBOOK INC

(FB)
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Some Facebook Ad Boycotters Return -- but Plenty of Big Players Are Staying Away -- Update

07/31/2020 | 04:26pm EST

By Sahil Patel and Nat Ives

Some advertisers that left Facebook Inc. for July to protest its handling of hate speech on its platforms say they are coming back, while the tech giant's financial outlook suggested the boycott isn't taking a major financial toll.

VF Corp.'s North Face, arguably the first widely known brand to join the campaign, said it would resume doing business with Facebook in August. "We are encouraged by the initial progress and recognize that change doesn't happen overnight," said a spokeswoman for North Face.

Marketers including brewer Heineken, sportswear maker Puma SE and spirits giant Pernod Ricard SA also said they would return to Facebook.

Other brands said they would extend their planned July boycotts into August at least, however, calling Facebook's moves insufficient. They include packaged-goods marketer J.M. Smucker Co., spirits maker Beam Suntory Inc., retailer Eddie Bauer LLC, business-software company SAP SE and Boston Beer Co.

Volkswagen AG said Friday that it will resume advertising with Facebook everywhere but the U.S., where it will extend its boycott. "Except in the U.S., we have seen great progress and movement in the right direction," the company said in a statement provided by a spokesman for Volkswagen Group of America. The spokesman said he did not have further information.

In June, civil-rights groups including the Anti-Defamation League and NAACP asked marketers to pull ad spending on Facebook and Facebook-owned Instagram for July, recommending 10 steps that they said Facebook should take to reduce hate speech and misinformation on its platforms. The steps included appointing a civil-rights expert at the upper echelons of the company and providing refunds to advertisers whose ads appeared next to objectionable content.

Since the boycott began, Facebook said it would hire an employee at the vice-president level to focus on civil-rights work. It also agreed to a new audit by industry measurement watchdog the Media Rating Council, expected to begin in August, that will evaluate the rules publishers and creators must follow if they want to make money from their Facebook content through ads, among other aspects of Facebook's ads business.

"We've invested billions of dollars to keep hate off of our platform, and we have a clear plan of action with the Global Alliance for Responsible Media and the industry to continue this fight," said a Facebook spokeswoman. The Global Alliance for Responsible Media is a group of advertisers, media companies, tech companies and others focused on improving safety standards online. Facebook's commitments to GARM include adopting proposals regarding the definition of hate speech and two outside audits of its transparency reports and ad policies.

In a call Thursday afternoon to discuss second-quarter earnings, Facebook Chief Executive Mark Zuckerberg said the company valued all of its advertisers but wasn't dependent on major brands. Chief Operating Officer Sheryl Sandberg said the company is working on civil rights "not because of pressure from advertisers, but because it is the right thing to do."

Facebook said ad revenue in the first three weeks of July, when the boycott was in effect, increased at roughly the same 10% year-over-year rate as it did in the second quarter. It cited the boycott among the factors contributing to its performance in the third quarter, along with economic uncertainty related to the coronavirus pandemic and new restrictions on ad targeting.

Facebook had more than 9 million advertisers in the second quarter, it said. More than 1,100 advertisers participated in the boycott, according to organizers.

Jonathan Greenblatt, chief executive of the Anti-Defamation League, said Facebook's decision to appoint a civil-rights leader and its creation of teams to study and address potential racial bias on its platforms proved that the "Stop Hate for Profit" boycott campaign produced results.

While some advertisers may resume spending on Facebook, Mr. Greenblatt said, the company still hasn't done enough and the campaign will continue. "Ultimately, this movement will not go away until Facebook makes the reasonable changes that society wants -- they have shown a willingness to do some of that," he said.

He said some advertisers agreed to join a future boycott if required, though he declined to name them.

Beyond the North Face, two other VF Corp. units -- backpack brand JanSport and sneaker marketer Vans -- also said they would end their boycotts when July ends. All said they would hold regular check-ins with Facebook about its policies and the content on its platform.

A spokesman for Puma, one of the companies ending its boycott, said the company was "encouraged by the progress that has been made in regards to tackling hate speech, racism and discrimination on Facebook's platform."

But Smucker, whose brands include Folgers coffee and Jif peanut butter, and other marketers extending their boycotts said Facebook hadn't delivered an adequate plan.

And advertisers that paused their Facebook spending for longer periods or without a set return date, such as Unilever PLC, Coca-Cola Co., Chipotle Mexican Grill Inc. and Verizon Communications Inc., said they aren't ready to come back.

Coca-Cola, which pulled back from all social-media advertising on July 1, said it was returning to YouTube and LinkedIn on Aug. 1 but not Facebook, Instagram and Twitter.

Verizon didn't join the "Stop Hate for Profit" campaign but suspended Facebook and Instagram ads in June after the Anti-Defamation League released a screenshot showing a Verizon ad next to a Facebook post alleging that FEMA was preparing to put people in concentration camps.

That incident reflected one major area of concern for advertisers: the chance that their ads could appear next to objectionable content.

That is particularly true within Facebook's news feed, where advertisers don't have controls to limit what type of content or posts their ads might appear next to. Facebook said it is looking into the issue, but advertisers want concrete actions and results, according to two senior ad buyers who have had discussions with Facebook executives on the matter.

Advertisers have brand-safety controls for ads on other parts of Facebook, such as videos on Facebook Watch, but Facebook's biggest and most important ad placement remains its news feed, the buyers said.

"Everyone is buying feed," said one of the buyers, whose agency spends hundreds of millions of dollars on Facebook annually. "And that's the biggest thing we're dissatisfied with -- their [lack] of commitment to making changes in the news feed."

Facebook has around $70 billion in annual advertising revenue, providing plenty of insulation during the boycott.

Many brands, especially so-called direct-to-consumer companies and other performance marketers, didn't cut Facebook ad spending because they regard it as an effective and important marketing vehicle.

"There's a middle segment of clients who boycotted and are not happy with Facebook but can't afford not to be on Facebook in some capacity -- because their business models say they need to be on Facebook or because their audience is already there," said one of the ad buyers.

In a sign of Facebook's continued importance and consumer reach, Unilever-owned Ben & Jerry's Homemade Inc. said it won't advertise its products on Facebook, Instagram and Twitter for the rest of the year -- but it will still buy ads from the companies for its social-justice and election-related work.

"This work is too important to 'unilaterally disarm' across these platforms that remain powerful channels to engage citizens on these critically important issues," a spokesman said.

Brad Reagan contributed to this article.

Write to Sahil Patel at sahil.patel@wsj.com and Nat Ives at nat.ives@wsj.com

 

Stocks mentioned in the article
ChangeLast1st jan.
CHIPOTLE MEXICAN GRILL, INC. -1.23% 1686.88 Delayed Quote.21.65%
FACEBOOK INC -2.33% 333.12 Delayed Quote.21.95%
HEINEKEN HOLDING N.V. -3.39% 76.9 Real-time Quote.-0.19%
HEINEKEN N.V. -2.35% 93 Real-time Quote.1.95%
PERNOD RICARD -2.86% 206.9 Real-time Quote.31.95%
PUMA SE -4.37% 103.95 Delayed Quote.12.65%
SAP SE -3.84% 115.22 Delayed Quote.7.46%
SUNTORY BEVERAGE & FOOD LIMITED -0.71% 4205 End-of-day quote.15.21%
THE BOSTON BEER COMPANY, INC. -2.09% 454.64 Delayed Quote.-54.27%
V.F. CORPORATION -2.14% 73.98 Delayed Quote.-13.38%
VERIZON COMMUNICATIONS 0.27% 51.8 Delayed Quote.-11.83%
VOLKSWAGEN AG -4.89% 163.94 Delayed Quote.7.56%
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Financials (USD)
Sales 2021 118 B - -
Net income 2021 39 871 M - -
Net cash 2021 69 121 M - -
P/E ratio 2021 24,0x
Yield 2021 -
Capitalization 927 B 927 B -
EV / Sales 2021 7,29x
EV / Sales 2022 6,03x
Nbr of Employees 68 177
Free-Float 84,5%
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Number of Analysts 52
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Managers and Directors
Mark Elliot Zuckerberg Chairman & Chief Executive Officer
David M. Wehner Chief Financial Officer
Michael Todd Schroepfer Chief Technology Officer
Atish Banerjea Chief Information Officer
Sheryl Kara Sandberg Chief Operating Officer & Director
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