SOCIAL MEDIA UPDATE Q2 2020 Facebook Ad Boycott, Instagram’s IGTV Ads, Snapchat’s Partner Summit, Twitter’s Declining Ad Revenues and More JULY 2020 Jasmine Enberg Contributors: Debra Aho Williamson SOCIAL MEDIA UPDATE Q2 2020: FACEBOOK AD BOYCOTT, INSTAGRAM’S IGTV ADS, SNAPCHAT’S DEVELOPER CONFERENCE, TWITTER’S DECLINING AD REVENUES AND MORE This is the latest installment in an ongoing series of updates for the major social platforms. The goal of each report is to provide a summary of key recent developments and what they mean for marketers. How is social network ad spending doing? Net Facebook Ad Revenues Worldwide, 2018-2022 billions, % change and % of total digital ad spending Our new forecast shows that Facebook, Instagram $108.56 and Snapchat will grow their worldwide ad revenues in 2020, albeit at a much weaker rate than we previously $90.67 expected. Twitter’s ad revenues will decline. Q1 earnings $73.78 from the platforms showed mixed results, from $69.66 year-over-year double-digit revenue growth for Snap to $55.01 flat ad revenues for Twitter. 26.6% 37.7% 24.6% Will the Facebook ad boycott affect its 2020 22.2% 23.3% ad revenues? 19.6% 21.4% 5.9% 22.9% 19.7% The boycott will likely do more damage to Facebook’s reputation than its bottom line. While many big-name 2018 2019 2020 2021 2022 brands, including Unilever, Coca-Cola and others, have Ad revenues % change % of total digital ad spending paused spending, there is still a long tail of smaller Note: includes advertising that appears on desktop and laptop computers advertisers that will continue to advertise on the platform. as well as mobile phones, tablets and other internet-connected devices, and includes all the various formats of advertising on those platforms; includes Instagram advertising revenues; net ad revenues after companies How has social network monetization changed in pay traffic acquisition costs (TAC) to partner sites Source: eMarketer, June 2020 Q2 2020? 256484 www.eMarketer.com Commerce was top of mind this quarter for the social KEY STAT: Our updated forecast shows that Facebook’s platforms. Facebook and Instagram Shops were launched, worldwide ad revenues will grow by just 5.9% in 2020 and Snapchat introduced a new third-party app program due to the coronavirus pandemic. called Minis. Other monetization developments include the launch of IGTV ads, Facebook’s experimentation with WhatsApp payments and Snapchat’s introduction of a new video ad format, First Commercial. CONTENTS Will the gains in social network usage persist? 2 Social Media Update Q2 2020: Facebook Ad Boycott, Our new forecasts for international social network users Instagram’s IGTV Ads, Snapchat’s Developer Conference, and US time spent with social networks show increased Twitter’s Declining Ad Revenues and More user growth and engagement during the pandemic. We 3 Trend in Focus: Facebook Ad Boycott expect both trends to moderate as people eventually return to their routines. 4 Facebook 8 Instagram WHAT’S IN THIS REPORT? This report explores key developments for Facebook, Instagram, Snapchat and 9 Snapchat Twitter in Q2 2020, including our updated forecasts for 11 Twitter global social network ad revenues, US time spent with 12 Read Next social networks and international social network users. 12 Sources 13 Editorial and Production Contributors SOCIAL MEDIA UPDATE Q2 2020 ©2020 EMARKETER INC. ALL RIGHTS RESERVED 2 TREND IN FOCUS: FACEBOOK BOYCOTT BACKGROUND AD BOYCOTT The backlash against Facebook began after protests for racial justice started sweeping across cities in the US In late Q2, major advertisers began pulling their ads and worldwide in late May. Facebook was criticized for from Facebook to protest how the company handles not removing harmful misinformation about the protests, hate speech and misinformation. While social media including false posts about potentially violent collectives ad boycotts aren’t new, this time it comes against of anti-fascist activists, or “antifa,” heading to certain areas of the US where demonstrations were being the backdrop of the coronavirus pandemic, which is held. (Similar problems existed on other platforms, but putting a strain on Facebook’s business and the larger Facebook has become the primary target as it has the ad market. most users and revenues of the major social networks.) Brands that have paused spending, such as Starbucks, Many of the brands that have pulled spending are part of Verizon, Ben & Jerry’s, Ford and adidas, have done so the “Stop Hate for Profit” boycott, led by six civil rights to varying degrees. Some have pulled their ads for the groups including the Anti-Defamation League and the month of July on Facebook (and Instagram) only, while NAACP. The movement gained momentum in mid-June others have taken it several steps further. Unilever, for when the coalition began asking US marketers to instance, has pledged to stop US spending on Facebook, temporarily stop buying Facebook ads. The campaign said Instagram and Twitter through the end of 2020. it has now begun urging international advertisers to join in the effort as well. Coca-Cola, meanwhile, said on June 26 that it would pause all social media ad spending worldwide for 30 Other companies that have suspended their Facebook days, while UK-based beverages company Diageo said advertising have distanced themselves from the official it would indefinitely suspend all social media advertising boycott, but their end goal is ultimately the same: to globally starting on July 1. Microsoft stopped advertising pressure Facebook (and other social media platforms) on Facebook already in May. to take a stronger stand against hate speech and violent content. At the time of this writing, a precise estimate of the number of brands that have pulled spending is difficult In response, Facebook CEO Mark Zuckerberg announced to come by. One widely cited spreadsheet maintained in a June 26 live broadcast that the company would by Sleeping Giants, a liberal social media activism begin labeling content it deems as “newsworthy,” which organization and one of the backers of the official “Stop would otherwise be removed according to its policy. Hate for Profit” boycott, showed that the number of The policy prohibits hate speech, terrorism and language brands boycotting Facebook advertising was 1,033 as of that incites violence, among other things. The move is July 10. We think that figure is likely too high. The list is a similar to Twitter’s approach toward labeling misleading, mix of corporate entities and brand names, and there are manipulated or harmful content. multiple entries for several companies. Honda entities, for example, are listed at least three times. Zuckerberg also said that Facebook would begin prohibiting content that claims “people from a specific By comparison, social media analytics platform ListenFirst race, ethnicity, national origin, religious affiliation, caste, pegged the number of boycott participants at over 500 as sexual orientation, gender identity or immigration status of July 5. It also noted that there was a 74% reduction in are a threat to the physical safety, health or survival of new Facebook and Instagram ads by the company’s 485 others,” while updating its targeting practices to “better top advertisers during the week of July 1–5, compared protect immigrants, migrants, refugees and asylum with the average number of new ads on those same five seekers from ads suggesting these groups are inferior days between 2016 and 2019. or expressing contempt, dismissal or disgust directed at them.” Earlier in the month, Facebook had removed 80 What is clear, however, is that most of the advertisers ads from President Donald Trump’s reelection campaign that have suspended advertising are big brands, rather that it said used Nazi-linked imagery and were thus than smaller companies. against its policies. SOCIAL MEDIA UPDATE Q2 2020 ©2020 EMARKETER INC. ALL RIGHTS RESERVED 3 Our forecast, which was finalized before the boycott REVENUE IMPACT gained significant momentum, shows that Facebook’s While a temporary boycott of Facebook advertising in the worldwide ad revenues will grow by 5.9% in 2020 to US was unlikely to materially impact Facebook’s 2020 ad $73.78 billion. (Read the next section for more on our revenues, a longer-term global suspension could make a updated forecast.) larger dent. But even if it doesn’t hurt Facebook’s bottom line, the Still, Facebook isn’t likely to face more than a small hit. boycott has the potential to damage its reputation and Facebook is primarily a performance marketing platform, that of social media more broadly. As the US (and the and many of the brands that have pulled spending are big globe) face a reckoning over systemic racism, some brands, not performance advertisers. It has a long tail of consumers feel that Facebook and other social networks smaller businesses that will continue to rely on it for its simply haven’t done enough to curb the spread of reach, targeting and attribution. Reduced ad pricing as a racist and other hateful content, all while generating result of large companies pulling their spend may actually ad revenues. increase other businesses’ spending on campaigns that may not have previously been economical. Still, the Facebook boycott is not likely to change most consumers’ perception of brands. In a July 2020 Morning Amid the growing boycott, the press has reported on Consult survey, 41% of US adults said participation estimates from marketing research firm Pathmatics of would not impact their view of a company, and 20% big-brand spending on Facebook, which indicates that the were unsure or offered no opinion. Meanwhile, 30% said top 100 advertisers accounted for 6% of its ad revenues they would have a more favorable view of a company in 2019.