What started as a trickle has quickly turned into a flood.
Less than two weeks after a coalition of nonprofit organizations launched the #StopHateForProfit campaign, some of the world's biggest brands are pulling their advertising off of Facebook (NASDAQ:FB) -- at least for July. The moves are to protest the company's lax policies against the use of its social media platforms to spread political misinformation and calls to violence, and to support voter suppression.
The long-simmering issue has attracted fresh attention in wake of the Black Lives Matters protests sparked after George Floyd was killed, and as the 2020 presidential election has heated up. Facebook's inaction in these areas has been in notable contrast with Twitter (NYSE:TWTR), which recently began adding warning labels to posts from President Trump that contain questionable or false information, or violate its rules on such things as promoting violence. Facebook CEO Mark Zuckerberg, on the other hand, has consistently pushed back on demands that his company make similar efforts, saying he doesn't feel comfortable policing free speech.
Among those suspending their ad buys on Facebook are some of the biggest advertisers in the world, including Coca-Cola, PepsiCo, Unilever, Verizon, Diageo, and Starbucks. Some have been more direct about the boycott, while others have simply said they will pause advertising on social media generally. The boycott may offer some of these businesses cover to do something they were already considering for economic reasons with the global recession weighing on consumer demand and lowering the return on advertising spending.
By joining the boycott, brands can presumably earn some goodwill from the segment of the public that wants Facebook to start addressing the socially harmful content on its platform, but many of those companies genuinely support the cause.
For example, outdoor apparel and gear maker Patagonia said: "We stand with #StopHateforProfit in saying Facebook's profits will never be worth promoting hate, bigotry, racism, antisemitism, and violence." Verizon made a similar statement: "We're pausing our advertising until Facebook can create an acceptable solution that makes us comfortable and is consistent with what we've done with YouTube and other partners."
Why Pinterest could be a boycott winner
Though Facebook counts on millions of advertisers, most of which are small businesses that need the social media giant more than it needs them, the boycott seems poised to put at least a modest dent in its revenues. Starbucks, for example, spent $95 million on Facebook ads last year, while Diageo poured $23 million into marketing with the social media giant. Facebook brought in nearly $70 billion in ad revenue last year, but if the boycott is sustained and grows, Facebook could be ceding billions of dollars in sales to rival advertising platforms. Pinterest (NYSE:PINS) seems like a top candidate to pick up some of that market share.
Some companies have singled out Facebook and Twitter in their statements; others have included all of social media, though it's unclear what that means or which platforms their boycotts will include. Pinterest would seem to have the cleanest reputation of any major social media platform, as the site functions more as a place to collect aspirational and fandom-related imagery rather than as a home for the mud-slinging and thirst-trapping that can characterize interactions on Facebook, Twitter, and Instagram.
Pinterest, in fact, disavows the notion that it's a social platform at all, saying that users come to it to work on themselves rather than connect with other individuals. In contrast to those other online arenas, Pinterest presents itself as a positive place, and its advertising and posting policies seem to back that up. The company doesn't allow any political advertising -- a policy that has allowed it to sidestep the controversies that have swirled around Facebook and Twitter -- and bans advertising content with vulgar or violent imagery, or that is culturally or racially divisive.
"We want Pinterest to be a welcoming, positive, and inspiring place, so we don't allow divisive or disturbing advertisements," says the company.
Pinterest's 2019 revenue was $1.14 billion -- just 1.6% of Facebook's total. In other words, what would be a sliver of Facebook's ad revenue translates into a big chunk for Pinterest. If companies like Starbucks go elsewhere with those marketing dollars and spend some with Pinterest, that would significantly move the needle on its bottom line even if it barely impacts Facebook's.
Pinterest's stock price has slid alongside Facebook's in recent days, but it seems like a mistake for investors to link the two, as advertisers are likely to distinguish between them, and Facebook's role in the political process is much different than Pinterest's.
The boycott has just started, and no one knows how long it will last or if it could lead to lasting changes in the platforms that advertisers choose to partner with, but it's developing into a potentially significant tailwind for Pinterest. As a positive, ad-friendly, user-focused platform, it looks like an excellent option for advertisers fleeing Facebook. Now it's up to Pinterest to capitalize on that opportunity.