Advertiser boycotts in July could cost Facebook more than $250 million in the third quarter if 25% of its top 100 buyers pause spending, and as much as $500 million if 50% of the top advertisers stop, according to Bloomberg Intelligence analyst Jitendra Waral.Zuckerberg announced changes Friday created to appease critics, but the Anti-Defamation League, one of the groups calling for the boycott, called the amendments "small".
"From 1 July we will pause all paid advertising globally on major social media platforms". Shares closed at $216.08 Friday after reaching a record $242.24 the preceding Tuesday.
"We've entered a totally new era of digital activism", said Greg Sterling, a digital marketing analyst and contributing editor at Search Engine Land. "Indeed, all social media will be compelled to re-examine and adjust or adopt new policies that don't permit hate and racism to proliferate".
The company will "have discussions internally and with media partners and civil rights organizations to stop the spread of hate speech", the statement said.
Over the weekend, Zuckerberg responded to mounting criticism, explaining in a Facebook post that the company is expanding its ads policy to prohibit claims that people from a specific race, ethnicity, national origin, religious affiliation, caste, sexual orientation, gender identity or immigration status are a threat to the physical safety, health or survival of others.
As analysts have pointed out (see today's RTBlog), the pure financial impacts if even all of Facebook's top advertisers pausing their advertising on Facebook and its parent company would be relatively modest, accounting for about 6% of Facebook's ad revenues, which generated most of its $70 billion in total revenues a year ago. It will also start to label content that may violate their policies if it is deemed newsworthy.
Facebook has said it has invested heavily in efforts to stem racism in the wake of civil unrest triggered by the May 25 killing of African American George Floyd at the hands of Minneapolis police.
Mark Zuckerberg had $US7 billion wiped off his fortune as advertisers boycott Facebook.
The boycott "may lead to a softening of Facebook revenues a bit, but it will bounce back", he said.
Morningstar equity analyst Ali Mogharabi agreed that Facebook is likely to see only a minimal financial hit. Though Facebook was the initial focus of the boycott, Starbucks' latest move shows the controversy is spreading to other platforms. That only accounts for about 10% of its overall estimated $250 million it spends on Facebook advertising annually, according to Richard Greenfield of LightShed Partners, a media and tech research firm.
The group is pressing for a top-level executive "with deep civil rights expertise" to monitor Facebook's policies for discrimination and bias and an independent audit of "hate and misinformation".
No single company can significantly dent growth at Facebook, which generated US$17.7 billion (S$24.6 billion) in revenue last quarter alone.