80% Companies Gained Higher Revenue After Boycotting Facebook Advertising

Most online retailers and brands use Facebook’s advertising platform as a major way to make their products known to more people. This makes the service seem very important to businesses using online marketing. However, the world-leading social network has been criticized heavily many times for how it handles hate speech and misinformation.

However, according to data by Forrester, halting advertising on Facebook didn’t have negative impacts on most participating companies studied.

Specifically, Forrester examined 43 publicly traded firms that participated in last summer’s ad boycott against Facebook, only 7 of which experienced a revenue decline in Q3 compared with Q2. That means the other 36 companies did not see their revenue decrease quarter over quarter.

From Q1 2020 to Q3 2020, the revenue of these companies even went up. Plus, while the year-over-year revenue decreased for many firms in the third quarter, it was pointed out that COVID-19 was the main cause.

In July 2020, the boycott gained steam and involved brands like Adidas, Birchbox, Clorox, and Best Buy. It was led by civil rights groups, serving as an effort to pressure Facebook to crack down on misinformation and hate speech on its platform.

Combined together, Google and Facebook were expected to control over 60 percent of last year’s digital advertising market. In 2019, the social giant earned $70 billion in advertising revenue.

Forrester’s VP and principal analyst Sucharita Kodali said that advertising on Google and Facebook has appeared cost-effective for e-commerce businesses. But she also said that until now, “very few people have dissected what is truly incremental versus what would have happened anyway.” What she means is Facebook ads have been getting credit for online transactions that might have happened even if businesses had not used its advertising platform.

“That's why I thought this July boycott was so interesting. Very, very few companies have been bold enough to just completely shut off Google or Facebook to see the impact on their businesses. And that was one time that they did all collectively do so.”

It’s difficult to find out the precise effect as the COVID-19 pandemic has had a widespread influence across the economy in 2020, which declined the year-over-year revenue of boycott participants studied. But these results might have been better than expected considering those companies removed a major ads channel.

The fact that most of those firms were not negatively affected and did not perform worse than their worst timeframes suggests that the incremental lift is very limited, according to Kodali.

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