The Impact of #StopHateforProfit on SMEs | Happy Nine To Five

Friday, 4 September 2020

The Impact of #StopHateforProfit on SMEs

In July this year, more than 1,000 businesses have joined the #StopHateforProfit campaign, a global initiative that called on Facebook to impose stricter regulations on its platform and take action against hate speech and misinformation. 

Launched by civil rights groups and nonprofit organizations in the United States, the campaign called on brands to stop advertising on Facebook (and Facebook-owned Instagram) for the month of July. 

The aim was not only to put pressure on Facebook to change its policies and address the prevalent issues on its platform but also to have a significant impact on its ad revenue.

Huge global brands like The North Face, Unilever, Verizon, Patagonia, Upwork, Disney, Adidas and Coca-Cola have quickly joined the movement and pulled their ads off Facebook for the whole month of July, with some (like Unilever) committing to cutting their spend until the end of the year.

As the campaign gained popularity, more and more businesses were encouraged to take a stand on hate speech and join the ad boycott. 

What wasn't addressed, however, was the impact this initiative would have on small and medium-sized businesses, who are relying on the platform to drive revenue. 

Brands like Coca-Cola or Ben & Jerry's tend to use Facebook or Instagram for brand awareness, while small businesses rely on them for customer acquisition.

For many small direct-to-consumer brands, Facebook is a primary acquisition channel, and the reality is that there is no other platform out there that can offer advertisers the same scale and reach that Facebook does. 

Not to mention that smaller companies don't have access to the same multi-million marketing budgets that larger brands do, and may not have the luxury to put their ad spend into traditional channels like TV or out-of-home, or digital channels like programmatic or RTB.

Joining the movement was a luxury that larger brands had and SMEs couldn't consider. Even for many companies who joined the campaign, returning to the platform was necessary to ensure that they continue to grow their business in the current economic climate.

A recent data analysis by Socialbakers showed that at the end of July, ad spend across Facebook was only 11.8% lower than at the beginning of the month. In contrast, ad spend in the eCommerce sector went up 19% in July, to the highest it's been in 2020.

This shows that despite the global ad boycott, many businesses are still relying on the platform to drive growth. 

With 3.2 billion monthly active users (MAU) across all apps (including Instagram, WhatsApp and Messenger) and 1.8 billion daily active users (DAU) on Facebook alone, the platform continues to grow. To be able to reach your customers, you need to be on the platforms they use.

To understand the financial impact of the #StopHateforProfit campaign, it's essential to look at Facebook's business and ad revenue model. 

There are 9 million active advertisers on Facebook. The top 100 advertisers account for less than 20% of all ad spend, with most of Facebook's ad revenue coming from small and medium-sized businesses.

Out of the top 25 advertisers on the platform, only three took part in the ad boycott - Starbucks, Microsoft and Pfizer. However, their combined spend of nearly $2 billion only accounted for 3% of Facebook's ad revenue in 2019.

This means that even with some of the biggest advertisers cutting their Facebook ad spend completely, it wasn't enough to cause a huge dip in profits. 

And it's not hard to see why small businesses value the platform - they know they can rely on its hyper-targeted solutions and target customers at a reasonable cost. 

One of its core targeting solutions, Lookalike Audiences, can be a very powerful tool for both acquisition and retention because they allow you to target users who share similar characteristics with existing customers. 

It's also important to understand that Facebook is not a consumer company, and the actual customers are the advertisers. This is deeply ingrained in their business model, and it takes a lot more than large advertisers leaving the platform to drive change. 

It requires small businesses and agencies to also be in a position to afford to cut their ad spend, and this time, the companies that had the most power to drive change were also the ones that found it the most challenging the join in.

But not taking part doesn't mean you agree with what Facebook is doing, and companies shouldn't be judged for that. But it also doesn't mean that companies should stay silent.

There are many meaningful ways to contribute and show that you care about the causes promoted by #StopHateforProfit campaign. You can encourage diversity by collaborating with micro-influences in under-represented communities or donate part of your profits to a good cause.

This is also a good opportunity for brands to diversify their marketing channels and become less reliant on dominant platforms like Facebook or Google.

Do I think the #StopHateforProfit campaign was a great initiative?

Yes, definitely! There is so much happening on the platform that needs to be addressed, and we all know that Facebook is not doing enough to censor hate speech and stop the spread of misinformation. 

Advertisers are also becoming more conscious of their ad placements and don't want their ads to appear next to hateful content, as this has a major impact on brand perception. At the same time, consumers are becoming more aware of brand values and what brands stand for and against. 

Does this mean that everyone should stop advertising on Facebook?

No, and as someone who has worked with small businesses and has seen the benefits Facebook had on growth and profitability, I wouldn't recommend stopping it completely. 

It's great if you're in a position to afford to cut your ad spend on Facebook and focus on other platforms. But if you can't, don't feel pressured, as you're not the only one. 

There are many ways you can support the cause without affecting your business negatively in the long run and it's so important to consider the financial implications of joining such an initiative, especially in an uncertain, post-pandemic economy.

Two months after the start of the campaign, Facebook is still failing to address any changes that could make the platform safer for both users and advertisers. 

Their unwillingness to take action goes against their corporate purpose of giving people the power to build communities and bring the world closer together. 

But this is more than a moral issue, and it's not always easy to be on the right side of the story.

I don't support Facebook in this but I'm also not against it as an advertiser. I recognize the incredible value it can bring to businesses and the power it has to connect brands and consumers, unlike any other platform.

I'm hoping that a year or two from now we'll all be able to look at Facebook differently and enough changes have been made to bring it back closer to its core values - of being open, bold, and driving positive change across its communities.

Photo by cottonbro (Pexels)

No comments

Post a Comment

Blog Design Created by pipdig