Big DTC brands including Casper, Glossier, and Bombas continue to pump money into Facebook and Instagram despite the ad boycott

  • Many direct-to-consumer upstarts have steered clear of joining the boycott called for by civil-rights groups and others to protest hate speech on Facebook amid nationwide protests over racial injustice.
  • As of July 2, prominent DTC brands including Bark & Co., Casper, Daily Harvest, Freshly, Glossier, Harry's, and Stitch Fix were all actively running ads across Facebook and Instagram in the US.
  • The economic downturn has made it hard for DTC companies to abandon Facebook because it's one of their core business drivers.
  • But a group of DTC industry insiders is demanding that Facebook enforce its existing policies against hate speech and incendiary language, stop misinformation on its platform, and hold politicians and elected officials to the same standards as other users.
  • Visit Business Insider's homepage for more stories.

Hundreds of big-name advertisers from Unilever to Verizon are walking out of Facebook as a part of the Stop Hate for Profit boycott. But barring a handful of companies, many direct-to-consumer upstarts have steered clear of joining the boycott called for by civil-rights groups and others to protest hate speech on Facebook amid nationwide protests over racial injustice.

As of July 2, prominent DTC brands including Bark & Co., Bombas, Casper, Daily Harvest, Freshly, Glossier, Harry's, Ro, Stitch Fix, and SmileDirectClub were all actively running ads across Facebook and Instagram in the US, according to Facebook's Ad Library.

Bark & Co, Daily Harvest, and Stitch Fix were among the top 25 DTC spenders on both platforms, collectively shelling out more than $5.5 million in June, according to the advertising-analytics company Pathmatics.

DTC brands and millions of other small businesses heavily rely on Facebook's advertising platform to sell their goods and services. Small and medium-size businesses account for 76% of all spending on Facebook, according to Deutsche Bank, and aren't in a position to boycott a highly effective channel of marketing, especially during the economic downturn, industry experts said.

"For the bigger legacy brands, there's not so much of a cost to them coming off Facebook," said Christie Nordhielm, an associate professor at Georgetown University's McDonough School of Business. "For the smaller DTC brands, it's a question of money versus morality, and morality can be a luxury in business sometimes."

Business Insider reached out to 15 DTC brands — Bark & Co., Bombas, Casper, Daily Harvest, Freshly, Fridababy, Glossier, Harry's, Iris Nova, Mailchimp, Peloton, Ro, Stitch Fix, SmileDirectClub, and Untuckit — and 14 either declined to or didn't respond to a request for a comment. 

There are some exceptions. Mailchimp, a marketing-automation platform and email-marketing service, said it would participate in the boycott. Birchbox announced it was joining the boycott. 

Facebook has built a sophisticated ad platform for performance marketing

Facebook is an efficient channel for many DTC businesses, which rely on it for their marketing and sales since many don't have distribution in physical stores. Cutting out the platform means taking a hit to the bottom line and wouldn't set well with investors pumping money into these startups, Nik Sharma, a DTC strategist and investor, said.

"Facebook requires a very low buy-in, and it also has one of the best attribution systems for an ad platform — it's like crack for marketers," he said. "It just doesn't equate elsewhere because Facebook does a good job of not only putting your products in front of people, but also finds new people to push them to who are most likely to purchase."

While other brands may be able to channel their ad budgets to other platforms such as Google, Pinterest, and Snap, DTC companies don't have that option, Devin Whitaker, the director of performance marketing at the ad agency Good Moose, said.

While several brands have tried to wean themselves off Facebook and other performance-marketing channels in recent years, an overwhelming majority of DTC brands' web traffic is still generated from paid efforts on Facebook. Smaller brands that join the boycott could risk losing up to 80% of their monthly revenue, Whitaker said.

The coronavirus and economic downturn make it even harder for DTC brands to boycott Facebook

The coronavirus and resulting economic downturn has further complicated matters for DTC companies, which now find that demand is suddenly drying up as shoppers hunker down and restrict buying. In such an environment, it's even harder for them to abandon one of their core business drivers, experts said.

"It's a much taller ask in the current environment and is literally like a hostage situation," said Matt Rivitz, founder of the activist organization Sleeping Giants that's supporting the Stop Hate boycott. "You may want to take a stand but you have to stay in business first."

June was a particularly brutal month for DTC advertisers, as purchasing was not top of mind for consumers amid the social and political climate in the country post George Floyd's death and economic activity has only just started returning, said Sharma.

Plus, there is no evidence that consumers are on board with marketers boycotting Facebook so there's no compelling reason for DTC brands to allocate their dollars elsewhere, said Mike Duda, managing partner at Bullish, a creative agency and DTC investing firm. 

"Right now, we are in a world where the big brands are looking to cut ad spend anyway, so it's opportunistic finger-wagging," he said. "It's a business issue, not a consumer issue."

DTC brands are trying to push for change 

Some DTC brands are trying to lessen their dependence on Facebook and make it change its policies. Some companies have started to use more traditional mediums like TV advertising to find alternatives to Facebook's rising customer acquisition costs and diversify their advertising. 

More recently, a group of professionals working in the DTC industry have launched an initiative to draft an open letter to Facebook CEO Mark Zuckerberg. They belong to DTC companies including Flex, Winc, Splendid Spoon, and are asking Facebook to enforce its existing policies against hate speech and incendiary language, stop misinformation on its platform, particularly with respect to elections, and hold politicians and elected officials to the same standards as all users.

"This is a different approach than the boycott taking place; mostly because the advertisers with high spend on the channel can't cut spending without risking their business and the livelihoods of their entire team," said Meytal Misrahi, senior growth manager at Flex. "We have a responsibility to stronghold Facebook with a different leverage other than our brand names: our advertising budgets."

Facebook has made some concessions in recent days with its executives doing the rounds to pacify advertisers and Zuckerberg and other top execs planning to meet with the organizers of the boycott in the coming days. But it remains to be seen if the efforts will have a significant impact on its policies and its bottomline.

Zuckerberg has been privately telling Facebook employees last week that he expects boycotting advertisers to "be back on the platform soon enough," and that he won't change policies "because of a threat to a small percent of our revenue, or to any percent of our revenue," according to The Information. 

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