How Facebook boycott participants will change their spend

Advertisers are pulling money from Facebook and other social
media — but that probably won’t do much to benefit Facebook’s
competitors in the digital ad market. With numerous big-name
brandsannouncing a
pause on social ad spending, inspired by the Stop Hate for Profit
boycott, where will those dollars go instead?

There are two reasons why we expect spending previously planned
for Facebook likely won’t be spent elsewhere:

  • The brands pulling back on spending are generally not
    performance advertisers, and Facebook is a performance advertising
    platform. The advertisers pulling spend overwhelmingly fund brand
    campaigns on Facebook — not performance ones — because their
    businesses are not optimized for performance advertising.
    Therefore, these brands were never overly reliant on Facebook or
    any other performance platform for the kind of advertising they
    need to do. For context, large CPG brands like Unilever generally
    don’t maintain direct relationships with their customers and sell
    their products through countless retailers — this makes
    calculating ROI or ROAS incredibly difficult when a brand doesn’t
    have access to granular purchase data. 
  • Brands are looking to save during a softer economy. The brands
    boycotting also consist primarily of
    companies that sell consumer goods, which have seen lower sales due
    to the pandemic and the slower consumer spending. It’s likely,
    then, that the pause on social media will serve as a continuation
    of the broader pandemic-related pull back in ad spending as these
    brands look to cut costs. This strategy likely implies that brands
    will not reallocate their spend to other advertising channels but
    instead shift that spend towards their savings or other
    non-advertising aspects of their businesses. 

With the spending that doesn’t get saved, who stands to benefit,
both on the buy and sell sides?

  • Digital channels that can offer brand marketing without the
    risk of user-generated content. It’s important to note that the
    volume of spending being cut from Facebook is relatively small
    compared to the spend that Facebook receives from SMBs. But of the
    spending that gets cut, the portion that doesn’t get saved could
    shift to places like CTV/OTT platforms like Roku and Hulu, or
    ecommerce sites like Amazon that can serve similar purposes in
    terms of national campaign objectives — but without the same
    brand safety concerns. Some advertisers are also likely to
    experiment with less scrutinized social platforms like Snapchat and
    TikTok for similar reasons if they didn’t say they would pull back
    all social media spending.
  • Performance advertisers who continue spending on
    Facebook. Companies who sell their products online and maintain a
    direct consumer relationship spend most of their ad budgets on
    performance marketing. With brand marketers pulling out, these
    advertisers are likely to get
    a better deal
     on CPMs if they remain on Facebook. Facebook had
    said during its Q1 earnings call that brands pulling out of
    spending on the platform helped lower prices, which raised the ROI
    for some performance marketers — this in turn led them to
    decrease their spend.

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Source: FS – All – Entertainment – News
How Facebook boycott participants will change their
spend