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A massive exodus of advertisers puts Facebook revenue under pressure this quarter or just 1%

via:CnBeta     time:2020/6/29 10:01:30     readed:139

As more and more Facebook advertisers announce a moratorium on social media advertising, the company's revenue outlook has cast a shadow and put pressure on its share price.Companies such as Starbucks, Levi, PepsiCo and deagio have recently announced cuts in advertising spending, hoping to force Facebook and other social media companies to step up content censorship, crack down on violent, divisive and fake content, as well as content that advocates racism and crowd discrimination.


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There is no sign of a significant impact on Facebook's growth, which generated $17.7 billion in revenue in the last quarter alone. But the huge pressure of public opinion forced other brands to follow up one after another, coupled with the economic downward pressure brought by the new crown epidemic, made Facebook particularly under pressure.

"Given the noise, Facebook business will be significantly affected." Wedbush Securities analyst Bradley Gastworth (Bradley Gastwirth) wrote in the paper that "the company needs to solve this problem quickly and effectively to prevent the withdrawal of advertising out of control ."

As more and more brands announce boycotts or cut advertising spending, Facebook share prices will remain under pressure. Shares of unilever, one of the world's largest advertisers, plunged 8.3% on friday and lost $56 billion overnight after it suspended advertising on Facebook this year. The company CEO Mark Zuckerberg (Mark Zuckerberg) lost more than $7 billion in personal wealth. The stock, which hit a record high of $242.24 on Friday, fell to $216.08 on Friday.

Facebook have prepared for the weak business in the second quarter ending this week. "The advertising industry is likely to experience a more severe contraction ," the company CFO Dave Weiner (Dave Wehner) said at an April earnings call.

As the US novel coronavirus pneumonia confirmed a sharp increase in the resumption of the resumption of labor, many places slowed down or suspended the restart process, forcing some advertisers to shrink marketing expenses. Analysts now expect Facebook to maintain revenue growth of only 1% in the June quarter, with growth expected to be 7% in the third quarter. It will also be the worst quarter since the company went public.

Starbucks announced on Sunday that it would suspend advertising on all social media and engage in internal communication with media partners and civil rights groups "to stop the spread of hate speech ."

Trump posts

Some companies are targeting the entire social media industry, including twitter, while many are targeting Facebook directly. Zuckerberg has been cautious about limiting speech, especially the controversial content released by President trump. He said he did not want Facebook to be an arbiter of the authenticity of content.

It also angered many civil rights and lobbying groups, who urged advertisers to suspend advertising on Facebook's platforms in July in protest.

Zuckerberg responded on Friday that Facebook would tag all election related posts with a link to encourage users to view its new election information center. The social network will also expand its definition of hate advertising.

"We understand that people want to force Facebook to do more." "That's why we' re making extra statements on Friday ," Facebook vice president Nick Craig (Nick Clegg) said in an interview with CNN on Sunday ." That's why we' re going to continue to step up measures because we have zero tolerance for hate speech.

But the anti Defamation League said the measures were "minimal.".

Zuckerberg was caught in a dilemma by the mass evacuation of advertisers and the vigorous lobbying of civil rights organizations. He could take further steps to curb harmful information, but it could alienate free speech groups and trump supporters, who believe Facebook is censoring political speech and suppressing conservative voices.

Different evacuations

He can also conclude that these boycotts will not last long, as they have happened before. Yet Bernstein Securities analyst Mark Smrick (Mark Shmulik) said in Saturday's paper that the withdrawal of advertisers was different.

The current pressure of public opinion forces major brands to support civil rights organizations. "The current environment is very different." "It's easy to see who participated in the boycott, who didn't participate, and silence equals complicity," he wrote

Will zuckerberg give in? While major brands such as Unilever and Coca-Cola have attracted media attention, most of the Facebook's more than 8 million advertisers are small and medium-sized, many of which rely heavily on Facebook for revenue. Some people in the advertising industry say they can not afford to stop advertising, especially in business and consumer-oriented industries.

"A month's evacuation would seriously hurt their business ." Deutsche Bank analyst Lloyd Wolfsley (Lloyd Walmsley) said earlier this week ," That's too demanding ."

Facebook told advertisers last week that it did not want to make decisions based on sales. "We have always insisted on not changing policy because of revenue pressure." "We make our policies based on principles rather than business interests," Facebook wrote in a memo on Wednesday

Whatever Facebook do in the future, there is reason to believe that the withdrawal of advertisers will not end in the short term.

"When advertisers see their ads on Facebook with hateful content —— such as racist and anti-Semitic rhetoric, they end up" fed up ". "Advertisers keep calling us ," said Jonathan Greenblatt, CEO of the Anti-Defamation League. What I can tell you is that this is not over. (Siyuan)

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