META Meta Platforms Inc

By Sahil Patel and Nat Ives 

In a virtual town hall with marketers and advertising agencies on Tuesday, Facebook Inc. executives once again tried to answer complaints that the company hasn't done enough to counter hate speech and misinformation.

Led by Carolyn Everson, vice president of Facebook's Global Business Group, executives described efforts to make the Facebook and Instagram platforms less hostile and the difficulty of moderating conversations without constraining speech, according to participants.

It was just the latest effort by Facebook to show that the social-media giant takes seriously the concerns about its policies. But the company isn't only confronting the challenge sparked on June 17, when several civil-rights groups called on advertisers to pull their spending as a way to pressure Facebook into changing the way it handles content. Facebook is also facing discontent from advertisers stretching back years.

"The history really helped everyone feel pretty vindicated in taking this action and being serious about it," said Katia Beauchamp, co-founder and chief executive at beauty retailer Birchbox Inc., which joined the boycott on June 26.

That history includes the revelation in 2018 that personal data of tens of millions of Facebook users improperly wound up with data firm Cambridge Analytica, prompting government probes and calls for stricter privacy protections online.

Marketers have also criticized Facebook for the way it handles measurement on its platform and what some call a lack of commitment to brand safety -- keeping their ads away from objectionable content.

A Facebook spokeswoman pointed to the company's announcement on Monday about a new audit, run by industry watchdog Media Rating Council. It will evaluate Facebook's content monetization and brand-safety tools and practices as part of new initiatives the company is undertaking in response to recent criticisms.

Other companies that have paused ad spending with Facebook now include Volkswagen AG, Ford Motor Co., Clorox Co., Denny's Corp., Verizon Communications Inc., Coca-Cola Co., Unilever PLC, Levi Strauss & Co., along with smaller brands.

Some have also suspended advertising elsewhere in social media, and not all are identifying themselves with the boycott effort. More have focused directly on Facebook.

"Marketers' dissatisfaction goes way back," said Joy Howard, chief marketing officer at password manager Dashlane Inc., which said it won't advertise with Facebook at least through July, the month targeted by boycott organizers.

Ms. Howard participated in an earlier, one-week boycott of Facebook advertising over Cambridge Analytica when she was chief marketing officer at Sonos Inc., she said.

At Dashlane, her team was already trying to reduce reliance on Facebook over concerns about content even before the boycott call, she said, but also because of controversy over the potential for discriminatory advertising several years ago.

Facebook said then it would no longer let marketers target housing, employment and credit-related ads by ethnic affinity. In March 2019 the company settled five discrimination lawsuits in part by also removing age, gender and ZIP Code targeting for housing, employment and credit-related ads.

Facebook is also still trying to bolster advertisers' trust in the metrics it provides, going back to the 2016 disclosure that it had overestimated average viewing time for video ads on its platform for two years.

The Media Rating Council warned Facebook this spring that it could be denied a seal of approval that gives companies confidence they are getting what they pay for when it comes to advertising on its platforms.

The notice said that Facebook had failed to address advertiser concerns arising from a 2019 audit performed by Ernst & Young, most notably concerning how Facebook measures and reports data about video advertisements.

"These exchanges are part of the audit process," Facebook said in May. "We will continue working with MRC on accreditation, as we have since 2016."

Each incident has created blowback from advertisers, but Facebook has managed to continue to grow ad revenue. It reported companywide ad revenue of $69.7 billion last year, up from $55 billion in 2018 and $17.1 billion in 2015.

Facebook and Instagram's U.S. ad revenue alone is expected to grow nearly 5% to $31.43 billion this year, according to research firm eMarketer.

Even as the list of major marketers now suspending their advertising grows, Facebook remains somewhat protected because the bulk of its revenue comes from small and midsize companies. Facebook's top 100 advertisers comprised less than 20% of its total ad revenue in the first quarter of 2019, Chief Operating Officer Sheryl Sandberg said last year.

Many small companies and marketers that sell directly to consumers without going through retailers would suffer more than a major multinational from a Facebook boycott, said Kevin Simonson, vice president of social for digital marketing agency Wpromote LLC.

The business model of most consumer brands that sell primarily through the internet relies heavily on Facebook and Instagram, Mr. Simonson said. "So for them to pause their main source of revenue would be devastating to their business in ways that it won't for a vast majority of the big brands participating in the boycott."

Particularly for prominent brands, however, the current confrontation may be different than past strife because it revolves around broad ethical issues rather than concerns largely specific to the ad industry, some ad executives said.

"The difference this time is that CMOs are getting pressure from their boards, and the boards are getting pressure from the public and advocacy groups," said an executive at a large ad-agency holding company.

Facebook said that it invests billions of dollars every year to keep its platform safe and has banned 250 white-supremacist organizations from Facebook and Instagram. Facebook's technology finds nearly 90% of hate speech before anyone flags it, the company said.

"We know we have more work to do," Facebook said, adding that it would continue to work with Global Alliance for Responsible Media, an ad-industry group created to improve the digital ecosystem, and others.

The fight against hate speech overlaps with a longtime business concern of marketers in the digital age: keeping their ads far from offensive content.

Verizon suspended its advertising on Facebook and Instagram after the Anti-Defamation League released a screenshot showing a Verizon ad next to a Facebook post alleging that FEMA was getting ready to put people in concentration camps. The ADL is one of the organizers of the boycott.

"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," Verizon Chief Media Officer John Nitti said on June 25.

The Facebook spokeswoman declined to comment on Verizon's decision.

"There's more to it than issues of misinformation and hate speech," an ad buyer at a major advertising agency said. "Facebook needs to invest more in keeping advertisers away from objectionable content."

Write to Sahil Patel at sahil.patel@wsj.com and Nat Ives at nat.ives@wsj.com

(END) Dow Jones Newswires

June 30, 2020 19:48 ET (23:48 GMT)

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