This week, Emily Peck, Felix Salmon, and Anna Szymanski discuss the advertising boycott of Facebook (FB); environmental, social, and governance  (ESG) investing; and the implications of the latest jobs report.

In the Slate Plus segment: Netflix (NFLX).

Audio Length: 00:45:30

Transcript

S1: This ad free podcast is part of your Slate plus membership.

S2: Welcome to the good news is good news. Edition of Slate Money Guide to the Business and Finance.

S3: News of the Week. I’m Felix Salmon of Axios. I’m joined by Anna Shymasnky of Breakingviews. Hello. Emily Peck of Huff Post is also here. Hello. And we are going to talk about Facebook, which seems to have lost, at least for this month of July, 400 plus major brand advertisers. What does that mean for media and for Facebook? We are going to talk about environmental, social and governance, investing, ESG investing, and why the Trump administration doesn’t seem to like it very much. We are also going to talk about that jobs report this week, which I’m sure you saw what it means for the future trajectory of the U.S. economy.

We are also going to talk about Netflix and how they’re trying to place some of their cash into institutions which will funnel it towards black communities. It’s a fun episode, so stay tuned. All of that is coming up on Slate Money. So this is kind of unprecedented and amazing is that, as we all know, there are only two advertising platforms in the world anymore. They’re called Facebook (FB) and Google (GOOG, GOOGL). And one of them, Facebook, is now facing the biggest boycott that it has ever seen. It has over 400 big corporate brand advertisers who got together after being pressured into doing so by various advocacy organizations and said we are just not going to advertise at all on Facebook for the month of July. And this seems like a pretty big deal on a bunch of levels, a pretty big deal just on corporations making a stand, not just in a vague way about saying we think Black Lives Matter or something like that, but saying you Facebook, you are doing something wrong and we are going to try and punish you for it. And it also just it’s an incredible collective action thing that has come together in a very short amount of time. And it says a lot about whether Facebook even is a good place to granddad. I think there’s so much to unpack here. I am very glad that Emily, you are here to help unpack it. What’s your big takeaway from this?

S4: My big takeaway, I think, is probably that in the long term, this is not going to really impact Facebook all that much. I think that at least since 2016, the company has been on this sort of roller coaster where everyone complains about Facebook. You know, you cause Trump to win the election. And Facebook said, no, we did. And then Facebook said maybe we did. Then they made some changes and then everyone kind of let them off the hook. And I, I kind of feel like while this is big, that 400 advertisers are pausing or stopping putting their ads on Facebook. And some of them are also pausing, asked social media like Unilever is doing that. First of all, they’re not a big according to Facebook, they’re not a big percentage of advertisers on Facebook. These are big companies. But Facebook is saying that most of their advertising comes from smaller businesses, which is sort of interesting and much more.

S3: I mean, that’s that’s true. I’m pretty sure that’s true. I have a little spreadsheet which got leaked to me, which is kind of awesome, where it lists like one hundred advertisers on Facebook. And I’ll I’ll come to who the top two are in the moment. They are not part of the boycott, interestingly. But yeah, the fact is that the top 100 between them only account for about six percent of the advertising on Facebook. This is not one of those short head things. It’s actually been very difficult from from inception. Facebook has found it really hard to attract those big national brand advertisers, which is one of the reasons why it bought Instagram, because Instagram is much more friendly to brand advertising. And what’s fascinating about this boycott is that it’s not just Facebook, it’s also Instagram.

S1: I think that might speak to why a number of these companies are doing that. Facebook represents a small percentage of their ad spend, and they probably wanted to cut back on advertising spending anyway because of the pandemic and the economic downturn. And then now this enables them to do that while also getting a PR win.

S4: And I mean, Facebook has done some stuff in the past week like it, I guess. A band, a bunch of. And I don’t know if I’m pronouncing this right, boogaloo boogaloo groups, these white supremacist groups that had, you know, private groups on Facebook where they met up and in at least two cases planned violence, and that resulted in at least three deaths. So Facebook finally decided, oh, maybe we shouldn’t let these guys just lay down with each other on our social network. You know, maybe that’s not good. Free speech. So they did do that little thing. But I mean, think of. How small that gesture is compared to all the pressure on them? Just again, indicates to me that, like, this is a lot of PR and a lot of handwaving. And at the end of the day, the company is just nothing major is going to change from this. I’m sorry. We need regulation.

S3: You’re actually right. Emily, the boogaloo thing is not why anyone is boycotting Facebook. The reason why people are boycotting Facebook is because Facebook has said very explicitly that it is going to allow politicians to lie in their ads. And it’s not going to fact check those lies. And especially Donald Trump is allowed to say basically anything he wants in his ads, whether that’s true or not. And they are going to let him do that. And he is allowed to say very sort of hateful things and incite violence. And they are going to let him do that as well. And so that said, the initial impetus for the boycott came from organizations like Color of Change and the Anti Defamation League and Sleeping Giants who are very much concentrating on the Donald Trump side of things and saying this is not a great way of helping civil society, which is your stated raison d’être. You’ve got to stop this.

And what’s fascinating is that Facebook first impetus here, it’s was to reach out to the brands and to the agencies and say way. Hang on a sec. Can we talk to you? What if we shut down the private boogaloo group or whatever? And you say that’s marginal, especially given that Facebook owns WhatsApp, where more of these groups tend to live, the private groups. But the. More salient point here is that. The agency is in the brands just immediately turned around, said, don’t talk to us, you shouldn’t be talking to us, you should be talking to be ended defamation league and to cultural change and to sleeping giants, because that’s who we’re listening to. And if you can persuade them that you’ve done something effective and if they tell us, OK, you’ve made your point, now you can go back to advertising, then we’ll do that. But don’t try and persuade us directly like we’re part of a group here. And the people organizing this group are not the advertisers and the agencies. It’s the these other nonprofit organizations. And I think that their ability to answer in that way and say, like, listen, don’t talk to us is incredibly powerful. And I agree with you that this is not going to hurt Facebook economically or is a cultural force. But I do think that it’s a super interesting development in the world of media and advertising.

And I think it could presage a significant decline in. Companies using social media as part of their brand advertising, because I think they have basically they kind of have wanted to get rid of it all for a couple of years now. And it’s been very hard for them to do it because it’s such an enormous part of their audience. And they’re now saying, well, let’s do it for a month and see how it goes. And if we don’t see too much decline in, you know, our metrics, maybe we can keep on doing this. We can save money in perpetuity.

S1: You’re still going to have, though, all the small businesses which don’t have the reach of those large corporations and do still need to rely more on advertising through social media.

S3: Absolutely. The small businesses is the heart of Facebook and it’s the heart of Instagram. And it’s where Facebook remakes all of its money as the self serve advertisers who can’t afford TV ads, who can’t advertise in local newspapers because local newspapers don’t exist anymore. It’s all of those kind of people. And this doesn’t affect so economically, it doesn’t affect Facebook at all. I don’t think this is a big story in terms of the economics of Facebook, but I do think this is a big story in terms of it could mark an inflection point in terms of how brand advertisers advertise. They moved away from print en masse. They moved towards places like Instagram en masse. And now they might be thinking to themselves, well, is this actually working for us? And if it turns out that these social networks aren’t that important to them, don’t help them that much. They might just never come back. And as I is, you’re actually right. That wouldn’t be a big effect on Facebook, but it would be a big effect on all of the other places that carry brand advertising, including, you know, print media.

S4: That’s my question. I mean, my selfish question. There’s two things I feel like I want to discuss. First is the selfish one, which is like, OK, if advertisers abandon Facebook and other social networks, will they please come back to content? Exactly. Companies online and not Sobeys, Facebook and Google, basically the media industry. So maybe now we can be regurgitated. I don’t know where that metaphor is going, but that’s sort of like a hope. But I feel like that’s not what’s going to happen. I mean, Felix, do you have any thoughts on that? Like, if they’re leaving Facebook and they’re leaving Google, where are they going to put their ads? Have post.com or what?