Author / US Equity Research Society
Original title: advertising business is boycotted, what about Facebook?
Facebook, the social giant, is having a tough time recently.
As the black death storm intensified, Facebook let go of the comments, making it the first to boycott the list, and more notably, the growing number of multinational giants supporting it.
So far, it includes British consumer giant Unilever, American telecom giant Verizon、 Coca-Cola, ice cream maker Ben
Previously, most of the participants in the boycott were small and medium-sized enterprises. Now, with the gradual addition of large enterprises, the pressure on Facebook's share price and image may be even greater.
In the capital market, although Facebook's share price rose by about 2% on Monday, Facebook's share price plummeted by 8.32% as of the end of last Friday, the largest drop in nearly three months, and its market value fell by more than 56 billion US dollars. Meanwhile, Zuckerberg's personal worth has rapidly shrunk by more than $7 billion. Zuckerberg's wealth, previously estimated at $89.5 billion, will drop one place to fourth place from the list, according to the Bloomberg billionaires index
Crucially, while expanding global influence, organizers will continue to encourage more U.S. businesses to participate. Joint Free Press CEO Jessica
Because, as more and more Facebook advertisers announce a moratorium on social media advertising and large companies join the wave of resistance, Facebook's earnings prospects may also be clouded in addition to the huge pressure on its share price.
How much impact will it have on Facebook's performance?
As a global social giant, Facebook has three platforms: Facebook, WhatsApp and instagram, with more than 3 billion active users worldwide, and advertising is its revenue pillar.
First quarter revenue Facebook $17.737 billion, including advertising revenue of $17.44 billion, accounting for 98.3 percent, according to results. Facebook total revenue last year was $70.697 billion, advertising revenue was $69.7 billion, and more than 8 million advertisers. Advertising in Facebook importance, has been self-evident.
According to Needham
Among the advertisers who participated in the boycott, many companies' advertising spending on Facebook platforms should not be underestimated. Unilever put more than $42 million in Facebook advertising in 2019, ranking 30th, while Verizon ranked 88th, and the cost of advertising investment is naturally smaller than unilever; during the same period, coca-cola spent $22.1 million on Facebook platform advertising.
But in 2019, Facebook's top 100 advertisers accounted for only 6% of its advertising revenue, while home depot, Wal Mart, Microsoft, Disney and other top advertisers all joined the boycott. In fact, about a quarter of Facebook's annual advertising revenue of about $70 billion comes from large companies such as Unilever, most of which comes from small businesses. In this way, the current advertising boycott of these companies has a limited impact on Facebook's performance.
Moreover, due to pressure from all parties, Zuckerberg also said on the 26th that Facebook would begin to crack down on repression against specific races and ethnic groups.
But the anti-defamation League CEO Jonathan
Other social platforms that depend on advertising for survival,
The current boycott has extended to online advertising platforms including twitter, and Starbucks said on Sunday it would stop advertising on all social media platforms in an effort to stop the spread of hate speech.
Such a state, for the platform that highly depends on digital advertising business, it is almost impossible to say that there is no benefit damage. However, the impact of boycott on the Internet media platform is still difficult to determine in the eyes of analysts.
From the perspective of this year's advertising business environment, under the influence of the epidemic, the revenue of many enterprises has been affected, and the vast majority of advertisers have reduced the relevant expenses. On the whole, the situation of advertising business is not very optimistic. Compared with last year, the decline of advertising is certain.
Twitter said in May that its advertising revenue fell by 27% in April; Google's parent company alphabet also warned that the trend in early April might not be sustainable and that sales in the second quarter would be difficult.
However, in this state, enterprises are more inclined to transfer advertising business from traditional media to Internet platform.
Because Internet companies can usually provide paid advertising through big data, in the face of challenges in the industry environment and limited funds, advertisers tend to choose paid ads with obvious effects. During the epidemic period, users' online spending habits are cultivated, so it is understandable for advertisers to favor digital advertising. This just enhances the resilience of Internet companies such as social media platforms.
Snape's online sales in April rose to a 10-year high of 23.8% year-on-year; Facebook's advertising revenue was basically flat in April compared with last year after a sharp decline in March. From these phenomena, the overall advertising business fundamentals have tended to be stable.
In a word, the current advertising industry is not optimistic, but there is still room for further exploration of digital advertising.
So, under the dual pressure of the epidemic and the tide of advertising boycott, social media should refer to these companies that can grow against the trend. For example, snap is expanding against the trend. Under the epidemic situation, snap announced that it would expand the dynamic product advertising launched last autumn to more countries such as Europe, the Middle East and Australia, and really began to expand globally.
Behind the adverse growth, snap also employs advertising salesmen from some leading digital companies such as Facebook, Amazon, Google, and builds an advertising network across many sites and applications to solve how to provide a user experience for a wide range of brands, not just direct response advertisers from D to C.
In the final analysis, what any enterprise wants to move forward in the predicament is its own competitiveness and adaptability.
In addition to advertising revenue, the revenue of other parts of Facebook is very small. In recent years, the growth ceiling of Facebook users has gradually emerged, and the hidden danger of too single revenue model is highlighted. In fact, beyond social networking, Facebook is also frantically exploring other revenue channels.
Since 2013, Facebook has focused more on consumer hardware. At that time, Facebook and HTC jointly launched a customized smartphone HTC first and an Android desktop app Facebook home, but they didn't stir up much controversy and ended up in a fiasco. However, this has not affected its ambition to enter hardware.
In 2014, Facebook spent $2.3 billion to acquire oculus, and made heavy bets on AR, based on which it made some achievements in the field of hardware; in September last year, Facebook purchased Ctrl labs, a brain computer interface start-up, for $750 million. Although, on the whole, Facebook has not made a major breakthrough in the hardware field, but behind this series of actions, Facebook's intention to diversify is revealed.
In the field of financial payment, Facebook is not willing to fall behind. In April, Facebook announced its second-largest investment in history, embracing Ji platforms, an Indian company owned by Mukesh Ambani, Asia's richest man. In early June, Facebook invested $300 million in exchange for a 2.4% stake in gojek's payment business gopay. Although, earlier this month, WhatsApp, its instant messaging software, launched in Brazil, its in app payment service was suspended in Brazil less than two weeks after its debut. But with two investments in India and Indonesia, Facebook still has a future in the financial sector.
Facebook's layout in e-commerce business may have attracted more attention than in hardware and financial payment. After Facebook announced the launch of e-commerce in May, its share price soared. It can be seen that Facebook has high expectations for the secondary e-commerce market. In the previous announcement, Facebook said it would work closely with e-commerce platforms such as Shopify, bigcommerce and woolcom, which focus on serving the DTC brand.
As far as both sides are concerned, Shopify is bound to gain huge profits from the e-commerce transformation of Facebook, which has a large number of users; while the cooperation between Facebook and Shopify, which has a large customer base, can quickly attract more brands and retailers to settle in and attract a large number of users to buy things on the platform. Well, based on Facebook's billion user base, it is very likely to drive more traffic to cash in the e-commerce field.
Today, the tide of advertising resistance has further highlighted the drawbacks of Facebook's high dependence on digital advertising. To some extent, this will accelerate the diversification of Facebook. In the long run, the future Facebook may no longer rely too much on digital advertising, and will appear in front of the world in a diversified manner. But for Facebook, which is now bearing the identity of a social giant, this road is still a long way off.