Facebook’s ad revenue could take a hit if more brands follow Unilever’s lead on boycott

Facebook’s advertiser boycott is gaining steam: Last Friday, Unilever became the largest company to commit to pulling ad spend on the platform — and not just for July, as the boycott calls for, but for the rest of 2020. In response, Facebook CEO Mark Zuckerberg reversed his original stance Friday afternoon, saying the company would “start labeling posts it deems newsworthy but that also violates its policies,” though this doesn’t necessarily address all of the boycott’s recommendations.

How has the forecast for net facebook ad revenues in the US changed

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More advertisers joining the boycott could cause a domino effect. Last week, we predicted that even with a growing number of advertisers boycotting, it was unlikely to affect Facebook’s ad revenues. But this major pullback from Unilever — and a growing number of brands that have joined since we last covered it, including Verizon and Honda — could change that. “Unilever making a move like this changes the calculus for other big brand advertisers, especially Procter & Gamble,” said Nicole Perrin, eMarketer principal analyst at Insider Intelligence.

But this also present an opportunity for smaller local businesses and performance marketers that heavily rely on Facebook for advertising. “Reduced pricing as a result of advertiser boycotts may attract more spending on campaigns that wouldn’t be economical at higher prices, and provide better ROI for advertisers who remain,” said Eric Haggstrom, eMarketer forecasting analyst at Insider Intelligence. A significant portion of Facebook’s ad revenues are “driven by a long tail of smaller advertisers for whom there is no other real option for advertising in terms of reach, targeting, and attribution,” he added. So if small businesses spend more money on the platform, this could offset some of Facebook’s losses from big brands.

For context, we’ve already revised down our 2020 Facebook ad revenue estimates due to the coronavirus. We expect a 4.9% growth this year to $31.43 billion, far less than the $36.25 billion we originally forecast. “Unilever’s move is also coming at a time when advertisers are looking for efficiencies due to the COVID-19 pandemic, and many brand advertisers curtailed spending on Facebook earlier this year. It will be difficult to parse out the effects of the boycott from the effects of the pandemic on Facebook’s bottom line,” said Perrin.

 

Source: business insider

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