Facebook founder and CEO Mark Zuckerberg lost a whopping $7.2 billion in just a day as an increasing number of companies continue to pull out from advertising with the social media giant. On Friday, Unilever and Coca-Cola became the latest conglomerates to join an advertising boycott of Facebook.
Facebook in recent times has addressed concerns and even announced changes in its advertising policy around hate speech and voter suppression but has failed to impress big companies who till some time back considered it to be the only truly indispensable digital advertising platform. On Friday, the company's shares plummeted as much as 8.3 percent, its steepest decline in more than three months. And it seems the worst is far from over.
Big Blow to Zuckerberg
On Friday, Unilever and Coca-Cola became the latest companies to join the advertising boycott campaign against Facebook organized by civil rights groups. Following that, in the afternoon, Verizon, Harshey and Honda took similar steps amid the growing outcry of boycotting the social media giant for the way it handles political ads, hate speeches, and other advertising policies.
Facebook didn't care much about these allegations for months although it made minor alterations to its ad policies. However, with a string of big names including Unilever pulling out from advertising on Facebook on Friday, Zuckerberg finally announced tweaks to a few policies. However, that didn't help much as other advertisers like Lululemon and Jansport joined the boycott campaign later in the day.
Zuckerberg Fails to Manage Situation
There are now more than 120 companies that are participating in the ad boycott campaign. Unilever is one of Facebook's biggest advertisers and its decision to pull out from advertising with the social media giant is going to significantly impact the company's ad revenues. The changes in its ad policy announced by Facebook are the most relevant in recent months but critics feel they are still too incremental.
The $7.2 billion hit in market value now unseats Zuckerberg as the third richest person in the world. Friday's plunge has pushed Zuckerberg's net worth down to US$82.3 billion, making Louis Vuitton boss Bernard Arnault as the world's third-richest man after Jeff Bezos and Bill Gates.
Tough Times Ahead
The ad boycott is part of a broader campaign led by the Anti-Defamation League, the NAACP which launched #StopHateForProfit campaign in the wake of Facebook's decision to not take action on hate posts from President Donald Trump. This includes a post during the racial justice protests where Trump said "looting" would lead to "shooting". Since then, Facebook has been criticized by employees, politicians, and even scientists backed by Zuckerberg's philanthropic organization.
Facebook till some time back looked invincible as a digital advertising platform as it managed to dodge one controversy after another but this time around the ad boycott campaign has become a force the company can't ignore anymore. Earlier this week, Zuckerberg spoke to advertisers to calm the storm of protest about how it handles both political ads and also the proliferation of hate-speech and untrue information across the board but that hasn't helped much.
The company makes around 98 percent of its $70 billion in annual revenue from advertising. With over 120 companies now joining the movement this could significantly impact the company's profits.