Billions of dollars of its market value has disappeared and its chief executive officer has been bumped down a notch in his place among the world’s wealthiest.
But despite these big losses, Facebook is unlikely to suffer significant damage from the growing ad boycott over its policies to prohibit hate speech in its advertisements, say some marketing experts.
Indeed, some of the companies, depending on their size, could be hurting themselves more by limiting their exposure on the social media giant, suggest some industry experts.
“A few brands pulling their Facebook ads for a month will have little to no bearing on Facebook’s bottom line,” Mari Smith, co-author of Facebook Marketing: An Hour A Day, said in an email to CBC News.
And if small and medium businesses cut their ads altogether, even for one month, this could cause a massive loss of revenue for those business owners, Smith said.
“Joining the ad boycott would actually hurt their bottom line infinitely more than it would Facebook’s,” she said.
Coca-Cola, Starbucks are pulling ads
So far, a number of small- and medium-sized business, along with major corporations, including Verizon, Unilever, Starbucks, Best Buy, Coca-Cola, and The North Face, have said they will pull their ads from Facebook for the month of July. Canadian companies Lululemon, MEC and Arc’teryx have also joined the boycott.
WATCH | Canadian companies join Facebook ad boycott:
Their actions are a response to the StopHateForProfit boycott led by civil rights and advocacy groups, including the Anti-Defamation League and National Association for the Advancement of Coloured People. The groups claim Facebook has not done enough to keep racist, false and dangerous content off its platform and allowed users to call for violence against protesters fighting for racial justice in the wake of the deaths of several Black Americans.
Facebook CEO Mark Zuckerberg has said the company will change its policies to prohibit hate speech in its advertisements. Under the company’s new policies, Facebook will ban ads that claim people from a specific race, ethnicity, nationality, caste, gender, sexual orientation or immigration origin are a threat to the physical safety or health of anyone else.
Still, the boycott doesn’t seem to be letting up. Facebook’s stock slid by more than eight per cent on Friday, erasing $56 billion US from its market value. Zuckerberg is estimated to have lost more than $7 billion of his personal net worth, and was also knocked down from third place to fourth on the Bloomberg Billionaires Index.
But those that have joined the boycott represent just a small fraction of Facebook’s advertisers and revenue.
“To affect real, significant change with Facebook’s content moderating rules and all related issues, probably thousands of major brands would have to pull their ad budget for a month or more. Most likely, major brands are just not going to do that when it impacts their own bottom line,” Smith said.
The top 100 advertisers on Facebook platform represent only six per cent of their total ad revenue, said Beth Ellen Egan, an associate professor of advertising at Syracuse University.
Biggest advertisers haven’t joined boycott
Roughly eight million companies of all sizes advertise on the social media platform, and some of the biggest advertisers, including Walmart, Disney and Procter & Gamble, have not joined the boycott.
“They’re not taking that big of a hit overall,” Egan said.
Indeed, Dennis Yu, co-author of Facebook Nation and CTO of the digital marketing company BlitzMetrics, said in the last five to six years, despite all the controversies, Facebook has been on a steady upward trajectory — not just in its stock price but in its total revenue.
“Every year, there’s something like this that happens. And people predict the gloom and doom and death of Facebook,” he said. “I think [this boycott] is no different.”
We stand in solidarity with the <a href=”https://twitter.com/NAACP?ref_src=twsrc%5Etfw”>@NAACP</a>, <a href=”https://twitter.com/ADL?ref_src=twsrc%5Etfw”>@ADL</a> and others in the <a href=”https://twitter.com/hashtag/StopHateForProfit?src=hash&ref_src=twsrc%5Etfw”>#StopHateForProfit</a> campaign. We believe we all have a responsibility to create a truly inclusive society and are actively engaging with <a href=”https://twitter.com/Facebook?ref_src=twsrc%5Etfw”>@Facebook</a> to seek meaningful change. Learn more: <a href=”https://t.co/7CNc8Nk2aV”>https://t.co/7CNc8Nk2aV</a>
Alan Middleton, an adjunct professor of marketing at York University, said it’s possible Facebook will suffer down the road. He agreed that Facebook will weather this storm in the short term, but the boycott is just another hit against the company, which has already suffered negative press over issues of privacy and data handling.
“There’s a concept called the inflection point, which is when you get a whole bunch of things happen, [they] don’t seem to have an effect straight away, but then they accumulate and they become big enough that it really takes off,” he said.
Middleton views the boycott as another blow to how consumers view Facebook’s overall brand. And according to market research, that’s dropped dramatically over the last year, he said.
“So the risk is that bit by bit, the people will say, ‘Am I going to go on Facebook? No, I’m going to go on the next new one coming along.'”
Meanwhile, some of those companies boycotting the social media platform will likely also take a hit, particularly smaller companies.
Smaller companies benefit from ROI
The reason so much revenue comes to Facebook through smaller advertisers is that they benefit from a benefit from advertising on the social media company from a return on investment perspective, Egan said.
“They start advertising and there’s an immediate impact on their sales,” she said.
Facebook is essential for millions of small and medium-sized businesses that advertise on the two platforms, said Smith. And with the inordinate amount of data Facebook collects on users, advertising on its family of apps is the most targeted traffic ad dollars can buy.
According to Statista, a statistics portal for market data, there were 2.6 billion monthly active users on Facebook as of the first quarter of 2020, making it the biggest social network worldwide.
“That’s where the consumers are. You have to be where consumers are,” said Yu. He said he believes Facebook can have a “tremendous” impact on sales for some companies, but that can be difficult to measure, when consumers are being exposed to other forms of messaging for a product.
But the impact on the more well-known brands who withdraw their ads from Facebook will likely be minor as they rely upon word of mouth, he said.
Smith said major companies like Coca-Cola are unlikely to see a revenue hit, since their ads on Facebook are focused more on brand awareness.
“It’s not like people click on an ad and immediately buy a Coca-Cola,” she said.
Stock futures flat following sell-off on Wall Street – CNBC
U.S. stock futures were flat in overnight trading, following weakness in equities in the previous session.
Dow futures rose 40 points, indicating a gain of 0.16%. The S&P 500 and Nasdaq-100 also were set to open higher, with gains of 0.08% and 0.12%, respectively.
On Tuesday, the Dow Jones Industrial Average fell 397 points, or 1.5%, breaking a two-day winning streak. The Dow was brought down by a 4.8% drop in Boeing. The S&P 500 also registered a loss, slipping 1.1%, to break a five day win streak.
The Nasdaq Composite lost 0.86%, after notching its 27th intra-day all-time high of the year earlier in the session on Tuesday. The technology-heavy index was positive for most of the day thanks to strength in Apple, Microsoft, Facebook and Netflix, which all hit record highs.
“While significant gains in technology stocks kept the market afloat yesterday, even these market darlings capitulated during the afternoon hours today,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC.
Stocks that hinge on the reopening of the economy dragged down the broader market as investors digested a resurgence in coronavirus cases in the U.S. More than 2.93 million coronavirus cases have been confirmed in the U.S. along with at least 130,306 deaths, according to Johns Hopkins University.
“Concerns about rising U.S. Covid case counts continued to shake confidence in reopening efforts about the country,” Paulsen added.
Sentiment was boosted when the U.S. government awarded drugmaker Novavax a $1.6 billion contract to develop a coronavirus vaccine, the biggest amount yet granted under the White House’s “Operation Warp Speed.”
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North American markets mixed, Nasdaq on track for new record – BNN
4:15 p.m. ET: North American markets fall, close near session lows
North American equity markets closed lower in Tuesday’s trade, erasing much of the gains from Monday’s rally. The S&P/TSX Composite Index fell 0.47 per cent, the S&P 500 dropped 1.08 per cent, the Dow Jones Industrial Average declined 1.51 per cent and the Nasdaq Composite Index shed 0.86 per cent of its value.
The selloff accelerated into the closing hour of trading, after the major North American markets were largely mixed through midday. The declines marked the first negative showing for the S&P 500 in six trading sessions, with the broad-market benchmark snapping its longest winning streak of the year.
U.S. markets were led lower by stocks seen as sensitive to the prospects for a global economic reopening, with airlines, hotel operators and cruise line stocks posting losses. Boeing Co. on its own erased 62 points from the Dow with its 4.77 per cent drop.
In Toronto, nine of the 11 TSX subgroups finished in negative territory, with consumer discretionary, financials and health care posting the largest declines. Only materials and information technology closed the day higher.
160 of the composite’s 221 individual constituents closed out the session lower, with Enerplus Corp. and Seven Generations Energy Ltd. notching the largest percentage declines.
Oil prices retreated modestly, with U.S. benchmark West Texas Intermediate falling 0.74 per cent to US$40.33 per barrel and Alberta’s Western Canadian Select down 0.39 per cent to US$33.08 per barrel.
The Canadian dollar slipped against its American counterpart, falling four-tenths of a cent to 73.48 cents U.S.
12:00 p.m. ET: North American markets mixed, Nasdaq on track for new record
North American equity markets were mixed entering the Tuesday afternoon session, with the S&P/TSX Composite up about 0.2 per cent, the S&P 500 trading essentially flat, the Dow Jones Industrial Average down 0.7 per cent and the tech-heavy Nasdaq Composite Index up half a per cent.
Gains made in technology stocks had the Nasdaq on track to post a new record closing high, as heavyweights including Apple Inc., Facebook Inc. and Microsoft Corp. pushed the index higher.
The underperformance of the Dow was in no small part due to a 3.6 per cent decline in shares of Boeing, which took 46 points off the average on its own. Shares in the U.S. planemaker fell amid broad-based weakness in airline and hotel stocks amid concerns the surging U.S. COVID-19 case count could lead to another clampdown on gradual economic reopenings.
In Toronto, six of the 11 TSX subgroups were in negative territory, led lower by financials, health care and consumer discretionary stocks. Information technology, materials and industrials were the top performers.
Just over half of the composite’s 221 individual constituents were lower, with Enerplus Corp and Air Canada posting the largest percentage declines.
Oil prices pushed modestly higher, with U.S. benchmark West Texas Intermediate rising half a per cent to US$40.83 per barrel. Alberta’s Western Canadian Select gained 0.63 per cent to US$33.42 per barrel.
The Canadian dollar continued to lose ground against its American counterpart, shedding a quarter of a cent to trade at 73.61 cents U.S.
9:40 a.m. ET: North American markets slip, give back some of Monday’s rally
North American equity markets slid in early trading Tuesday, paring some of the gains made in Monday’s rally.
The S&P/TSX Composite Index fell about half a per cent, the S&P 500 declined 0.6 per cent, the Dow Jones Industrial Average dropped 0.75 per cent and the Nasdaq Composite Index slipped a modest 0.3 per cent.
The S&P 500 is on track to snap its five-day string of gains, the longest winning streak for the index since December as investors weigh the impact of global economic reopenings against a surge of new COVID-19 cases in the United States.
Traditional safe-haven assets rose following Monday’s declines, with a measure of the U.S. dollar and U.S. Treasuries both posting modest gains.
In Toronto, all eleven TSX subgroups opened the day in negative territory, led lower by energy, financials and healthcare stocks.
Crude oil gave up ground, with U.S. benchmark West Texas Intermediate down 0.7 per cent to US$40.36 per barrel. Alberta’s Western Canadian Select posted a similar decline, falling 0.66 per cent to US$32.99 per barrel.
The Canadian dollar fell two-tenths of a cent against its American counterpart to 73.64 cents U.S.
Canadian airlines accused of ignoring COVID-19 precautions, denying refunds – CTV News
When Bobbi Jo Green booked a flight back in May for her, her husband, and her children to see two ailing family members, she was counting on the airline’s physical distancing rules to still be in place.
But just three weeks before Green and her family were set to fly from Edmonton to Sydney, N.S., on July 17, WestJet announced it was ending its policy of leaving the middle seats on its flights empty.
“I was devastated,” Green said, noting her family spends every summer in Nova Scotia with her 93-year-old grandmother who is suffering from severe dementia and another family member with an incurable form of cancer.
“We all knew it could very well be the last summer we would spend with them.”
When Green called WestJet to see if any accommodations could be made, she told the company she has a heart condition that puts her in the high-risk category for COVID-19.
Despite her pleas, Green said the airline told her it was unable to make any special accommodations, nor would it allow her to change the date of the flight to before July 1, when the rules were relaxed, without paying a fee.
And Green’s not alone: as provinces begin to relax domestic travel restrictions, the cessation of physical distancing rules by two of Canada’s biggest airlines — WestJet and Air Canada — is causing frustration and grief among some passengers.
Gabor Lukacs, head of the advocacy group Air Passenger Rights Canada, said he has fielded countless complaints from passengers during the COVID-19 pandemic, many of which are related to the same issues: airlines refusing to offer refunds or accommodations amid the abolition of physical distancing rules.
While he acknowledges the effort to fill seats is due to airlines attempting to recoup billions in lost revenue, Lukacs argues the companies risk deterring customers from flying at all.
“The question is: do we allow economic considerations to override public health? We don’t allow supermarkets to sell spoiled meat because it’s cheaper. Are we going to allow doctors to skip disinfecting their tools to save the cost?”
There’s some evidence he’s right: a new poll conducted by Leger and the Association of Canadian Studies found 72 per cent of respondents say they are not comfortable flying now that Air Canada and WestJet have culled their seat distancing policies.
Only 22 per cent said they would be OK with flying under the newly relaxed rules.
In response to criticisms, WestJet forwarded The Canadian Press a statement from a July 3 blog post regarding changes to its seat distancing policy.
“The blocked middle seat was introduced at the beginning of the pandemic before the myriad of safety measures were put in place and mandated on board,” the statement reads.
“Seat distancing was never intended to be in place permanently or throughout the pandemic.”
The post notes a number of measures WestJet has taken to help stop the spread of COVID-19 on its flights, including mandatory masking, pre-boarding questionnaires for all passengers, temperature screening, thorough cleaning of aircraft between flights, and the restriction of in-flight dining services.
As of Tuesday afternoon, Air Canada did not respond to a request for comment.
However, the company has also denied it’s putting passengers and staff at risk by filling flights up, pointing to other safety measures as mitigating the risk of spreading COVID-19.
Yet some passengers report first-hand experiences in which masking protocols were not followed.
Maureen Isabel Green, 31, flew from Vancouver to Fredericton three weeks ago with Air Canada to visit her family, and said she was shocked by the lax use of masks by both airport employees and the passengers on her two connecting flights.
“I just think of all the people who are getting on a flight and risking their life, or risking the life of the people they’re going to visit, because some people don’t want to wear a mask for a few hours,” she said.
Green, who is a health-care worker, said there were numerous instances on her flight from Vancouver to Montreal where a group of young, male passengers took off their masks when flight attendants were not present.
While at the Montreal airport, Green said a man was able to board a flight without wearing a mask, simply by telling attendants he had a medical condition that prevented him from doing so.
Air travel has been at the centre of several headline-grabbing incidents throughout the pandemic — particularly since travel restrictions have been eased in some regions.
On July 2, health authorities in B.C. warned the passengers of four separate flights that they may have been exposed to COVID-19.
Just a day before — on the exact day the airlines ended their social distancing policies — the Nova Scotia Health Authority warned passengers of a Toronto-to-Halifax WestJet flight from the previous week that they may have been exposed to COVID-19.
And on Sunday, a Halifax man reportedly walked off of a St. John’s-bound flight after learning he was the only passenger travelling within the so-called “Atlantic bubble,” sparking discussion about the effectiveness of airlines’ COVID-prevention policies.
This report by The Canadian Press was first published on July 7, 2020.
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