Facebook frustrates advertisers as boycott over hate speech kicks off

Advertising test

Facebook said earlier this week it would submit to an audit of its hate speech controls, adding to plans to label newsworthy content that would otherwise violate its policies, following similar practices at other social media platforms such as Twitter Inc.

One digital ad agency representative who participated in a call on Tuesday said Facebook executives referred repeatedly to the audit, without offering additional concessions.

Facebook executives have reached out to CEOs, board members and chief marketing officers of major advertisers to talk them out of the boycott, two people briefed on the discussions told Reuters. All the sources requested anonymity because they were not authorized to speak on the record.

The boycott will be a test for advertisers on how to reach billions of consumers without relying on the largest social media platform in the world, an executive at a major ad agency said.

Companies that run ads in order to promote their brand image rather than to make direct sales are less beholden to Facebook. Many of these, including the multinational advertisers who have joined up with the boycott, will begin to plot how they can achieve the same goals without Facebook, the executive said.

For Facebook, the boycott is unlikely to have a big financial impact. The top 100 brands on Facebook in 2019 likely brought in only 6% of Facebook's total $70 billion in annual revenue, according to a Morningstar research note citing Pathmatics data, which measures most types of advertising on the platform. Facebook said last year its top 100 advertisers accounted for less than 20% of total ad revenue.

News of the boycott wiped away $56 billion from Facebook's market capitalization after an 8% drop in its stock on Friday. But shares recovered 3% on Tuesday and are actually trading 8% higher year to date.