More and more big-name brands are joining a boycott against Facebook (NASDAQ:FB) advertising in an effort to get the social network to take further action to prevent hate speech on its platform.
It’s not the first time Facebook has faced pressure to address objectionable behavior on its platform, with past efforts aimed at addressing things like foreign interference in U.S. elections and the general spread of misinformation. While the social network says it takes these public concerns seriously, the impact of past boycotts on its finances has hardly been noticeable.
This boycott feels a bit different: the Black Lives Matter movement is stronger than ever, and the list of recognizable brands actively joining the protest against Facebook — including REI, The North Face, Patagonia, Ben & Jerry’s, Eddie Bauer, Magnolia Pictures, Upwork, and Arc’teryx — keeps growing. The reality, however, is Facebook is very well suited to withstand any pressures on its business from a few advertisers, even those with substantial budgets.
Over 8 million advertisers
Facebook isn’t overly reliant on one or two big advertisers. A pullback in ad spending from a few large companies isn’t going to hurt its overall bottom line very much. Not even Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) can claim that about Google, which is expected to see a decline in U.S. ad revenue this year after several big advertisers cut their ad spend (more for economic headwinds rather than as a protest for Google’s actions).
Facebook has repeatedly said its biggest sources of ad revenue are supply constrained, rather than demand constrained. In other words, if a big advertiser cuts off spending on Facebook, a slew of advertisers are standing by to take over its ad impressions. While the social media titan may fetch a slightly lower price with fewer bidders, the value of that ad slot is not going to drop to $0.