Starbucks Suspends All Ad Spending on Facebook Platform

Starbucks Suspends All Ad Spending on Facebook Platform
July 1, 2020

 

The shares of Facebook (Nasdaq: FB) is on a downtrend as Starbucks joined the list of enterprises who have temporarily stopped paid advertising on “all social media platforms” to halt the dissemination of hate speech. In 2019, Facebook generated advertising revenue of $69.70 billion worldwide via its hundreds of thousands of advertisers. So, a halt on advertisement spending by top companies will definitely affect its topline. The stock of Facebook closed at $227.07, up $6.43 or 2.91% from the prior close.

Starbucks has clarified that it will continue to promote its products on social media platforms without paid promotion. Furthermore, the company has stated that it is not joining the #StopHateForProfit boycott campaign, which kicked off earlier this month.

Starbucks issued the following statement regarding the decision to halt paid advertising: “We believe in bringing communities together, both in-person and online, and we stand against hate speech. We believe more must be done to create welcoming and inclusive online communities, and we believe both business leaders and policy makers need to come together to affect real change.”

The latest top advertiser to announce paid ad suspension is Starbucks. Notably, the ad boycott initially targeted Facebook, but subsequently spread to other social media platforms. Last Friday, Coca Cola announced that it would halt advertising on all social media platforms across the globe. Unilever has also decided to stop advertising on Twitter, Instagram, and Facebook in the US through December 31st. Likewise, beginning July, spirits manufacturer, Diageo will halt paid advertising on all social media platforms. Starbucks, however, clarified that it would continue advertising on YouTube, owned and managed by Google.

Earlier this month, a group of organizations demanded Facebook advertisers to temporarily halt spending on advertisements in July, and over 100 popular brands including Levi’s, Patagonia, Lending Club, REI and The North Face have revealed their plans to join hands, as per a list published by Sleeping Giants. The organizations, which called for a boycott of ad spend, includes the Anti-Defamation League, Sleeping Giants, the NAACP, Free Press, Color of Change, and Common Sense. The group had asked, “large Facebook advertisers to show they will not support a company that puts profit over safety.”

The organizations have mentioned that they have asked Facebook to take strict actions against hate speech and false information through several measures, including the creation of a “separate moderation pipeline” for users who believe they are being targeted just for their race or for following a religion, or to permit advertisers to view how often their advertisements were shown near contents that were later withdrawn for wrong info or animosity, and permit refunds for advertisements.

The decision to curtail/suspend advertisement spending by major corporates are expected to turn the stock of Facebook range-bound with slight bearish bias in the short-term.

Technically, the stock is facing resistance at 240. The next support is anticipated only near 190. Additionally, the stochastic is also in the overbought region. Therefore, we are anticipating the stock to move down and test the 50-day moving average, which acts as support.

fb - technical analysis - 1st July 2020

Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.

Richard W

Richard W

Richard is the guy who know everything there is about the financial industry, working in a top firm for over 15 years, he will give the lowdown on some of the biggest companies in the world


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