Facebook Ad Boycott Creates Buying Opportunity: Analyst
Facebook’s stock is taking a hit as the list of brands that are bailing on Facebook continues to grow in response to the social media company’s refusal to fact-check President Trump’s tweets. Facebook’s market value cratered nearly $60 billion on Friday as investors digested the severity of the ad revenue loss Facebook could suffer from.
Minimal impact: The fallout, however, might not be as drastic as the stock market is forecasting and creates a buying opportunity, according to Raymond James analyst Aaron Kessler. Kessler says the financial impact on Facebook and other social platforms “remains fairly minimal.” Here’s a look at key points emphasized by the analyst.
Diverse advertiser base: The top 100 highest ad spenders on Facebook accounted for ~6% of its revenues, according to Pathmatics. Facebook’s top 100 advertisers represented less than 20% of revenues in 1Q19.
Temporary boycott: Many brands pulling ad dollars from Facebook have focused on July spend, which Kessler notes is a seasonally slow quarter.
Don’t chase ‘em, replace ‘em: “Social platforms are typically able to replace lost advertisers with other advertisers given the auction dynamics of the platforms.”
Facebook’s response: Raymond James is optimistic that FB’s recently announced changes will help assuage advertiser concerns. Facebook said Friday it will begin labelling posts that break its rules but are considered "newsworthy."
