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Facebook: To Boycott or Not to Boycott?

As you’ve likely heard, a growing number of companies are choosing to boycott Facebook advertising for the month of July. As a digital agency who leverages Facebook’s advertising capabilities on a daily basis, we’ve been watching this pretty closely to see how this progresses.

A question for the digital age

The question of the role of social media companies in moderating content is not a new one. There have long been discussions in the European Union – including the national and EU courts – about the role of these companies in relation to traditional media companies and the amount of responsibility they have in overseeing the content published on their platforms. In North America – and particularly in the United States – there has historically been less appetite for corporate regulation, meaning that this issue has never really made it into the mainstream of public discourse.

However, the current discussion around systemic racism has brought this question into the foreground. In the past, Facebook has been the least active in moderating content on its platform, which is perhaps why it’s at the centre of this movement. What started with Patagonia, REI and the North Face has evolved into an advertising boycott that includes companies such as Starbucks, PepsiCo, Coca-Cola, Diageo, Unilever, and Verizon. With the addition of these companies, the boycott has moved into the mainstream of corporate advertising.

The ultimate effect of this movement on Facebook remains to be seen. Since the latest round of announcements share prices have dropped almost 10%. However, Facebook has more than 8 million advertisers. While the above companies represent a significant spend, with more ad inventory available at cheaper prices, we may see an increase in advertising activity from other advertisers. The announcement of a Civil Rights Audit and subsequent policy changes does indicate that Facebook does see the threat in this movement, at least from a reputational perspective.

The Business Standpoint

Organizations around the world are facing the same question – to boycott or not to boycott? We believe there are two key business factors that organizations need to consider when evaluating this question.

The first, and perhaps the most important factor, is your brand. At Wallop, we strongly believe that your brand is one of your most valuable assets. “A strong brand attracts new customers, retains existing customers and offers a platform for the introduction of new products” (Fournier and Srinivasan, Nuremberg Institute for Market Decisions). As a result, damage to this brand can have a significant impact on your business. One only needs to look to the recent chaos surrounding the CrossFit brand and it’s founder Greg Glassman as an example.

This is why our recommendation is to pause advertising. Doing so minimizes the potential for damaging brand exposure that could potentially undo all of the time and energy you’ve put into building your brand. 

That being said, it’s also important to consider the second factor: the recent performance of your Facebook advertising campaigns. We certainly recognize that the past few months have been particularly challenging for the travel industry. Occupancy rates have seen historic lows with an unprecedented number of people furloughed or laid off. COVID-19 has certainly caused a lot of pain. While we are not out of it yet, the last few weeks have pointed to a rebound. Consumer confidence and travel intent is increasing in many regions

We’ve also seen strong performance gains for many of our clients and Facebook Advertising has played a significant role in this. When planning re-opening campaigns for clients, we’ve learned very heavily on Facebook as we’ve been able to generate clicks, inquiries and bookings at a cost well below the industry average. And with more and more advertisers pulling out of the marketplace, it’s likely that these trends will continue. 

In sum, from a business standpoint, its vital to assess its potential impact on your brand and business performance goals, particularly given the dramatic impact of the COVID-19 pandemic.

The Wallop Standpoint

Outside of the business factors, there is one more thing to take into consideration: the role you want your brand to play in society. While the goal of every company is to generate profit for their stakeholders, we believe that companies also have a responsibility to the communities they operate in and society as a whole. And as it stands, society is neither happy nor healthy. Systemic racism and a lack of equality within our societies are not new issues. Regardless of your nationality or country of residence, there is no ignoring that a large proportion of our society continues to be marginalized. Unfortunately, a significant amount of people choose to perpetuate this marginalization, often based on misinformation that is shared every day on platforms such as Facebook. We believe that as part of their responsibility to society, businesses need to combat this misinformation.

While this may not be compatible with the short-term, profit-oriented approach that currently predominates the stewardship of most companies, it does support long-term performance. For those who do not see the value in long-term thinking or disagree with the idea that business has a responsibility to society, we’d like to point out that companies embodying these values are often more resilient and profitable.  And with the average lifespan of a U.S. S&P 500 company falling by 80% in the last 80 years (from 67 to 15 years), and 76% of UK FTSE 100 companies disappearing in the last 30 years, resiliency is something that companies need to be thinking about.

The Way Forward

For us, the choice to boycott is clear. That is why we have decided to pause all of our Facebook ads. However, we do recognize that this is a balancing act between often competing factors (brand, performance, values etc). For example, some might consider being vocal about our choice to boycott a risky move from a brand perspective. Alternatively, the expected performance decrease from pausing Facebook ads may be too large to stomach in the wake of COVID-19. In other words, we do recognize that what is right for Wallop may not be right for others. While we certainly encourage organizations to consider what we’ve referred to as the “Wallop standpoint” above, it is not up to us to dictate anyone’s approach.