Welcome to Marketing BS, where I share a weekly article dismantling a little piece of the Marketing-Industrial Complex — and sometimes I offer simple ideas that actually work.
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Thanks for reading and keep it simple,
Edward Nevraumont
Stop the Hate
In mid-June, several civil rights organizations — including the NAACP and the Anti-Defamation League — launched a campaign called “Stop Hate for Profit.” The group has called upon advertisers to boycott Facebook for the month of July. A June 23 article in Bloomberg provides some details:
The group says that Facebook, which brings in almost all of its revenue from advertising, makes money off user posts that include hate speech, racism and misinformation.
A few large marketers were quick to jump on board. Outdoor apparel brand The North Face, owned by CF Corp., on June 19 tweeted “we’re out,” and confirmed to Bloomberg that it has pulled ad spending for both the main Facebook social network and its photo-sharing app Instagram until August. Recreational Equipment Inc., known as REI, which also sells sporting gear, and Upwork Inc., an online marketplace for freelancers, joined the boycott that afternoon. On June 21, Patagonia Inc. also pledged an advertising pause. On Tuesday, outdoor outfitter Arc’teryx said it would halt Facebook spending at least until the end of July, followed closely by popular ice cream maker Ben & Jerry's Homemade Inc., part of Unilever NV.
Why are these companies joining the boycott? In previous newsletters, I have argued that most customers don’t actually care about the moral positions taken by brands. As such, the companies that decided to “take a stand against hate” likely considered the possible impact of three factors:
The loss of sales from pulling Facebook advertising for a period of one month.
The positive lift from media coverage of their decision. (And those PR benefits have materialized — the boycotting companies have been mentioned in the Bloomberg article, here on Marketing BS, and many other news sites and social media posts).
The perspectives of their own employees.
I expect that point 3 played the largest role in deciding to join the boycott, given the importance of “marketing to employees.”
Of the six brands cited in the Bloomberg article, four are retailers that not only specialize in clothing and gear for outdoor activities, but also place a high value on ethical corporate conduct. I imagine that those companies attract employees who generally support social justice issues and vilify tech companies; a workforce like that is far more likely to support the Anti-Defamation League than the world's largest social network.
Do you know what else all of those companies have in common?
Facebook advertising doesn’t matter very much for them.
Who will boycott?
The Bloomberg article calculated the total social media reach of the six brands: they have “19 million combined Facebook followers, and more than 13 million on Instagram.”
Those tallies, though, do not provide information about the importance of the companies’ Facebook ad spend. Most advertising can be divided into two categories:
Direct activation — campaigns to drive a sale, collect an email address, etc.
Long-term brand building — campaigns to boost awareness and consideration.
In “Marketing During the Pandemic,” I described three attributes of long-term brand building:
Substitutable — if you don’t get the impressions on one particular channel, you can acquire them somewhere else.
Delayed impact — both good or bad outcomes will not be felt immediately.
Difficult to measure — concepts like “brand affinity” cannot be easily captured by quantitative tests.
With those core characteristics in mind, you can see that companies face limited risk by walking away from a long-term brand-building channel. Especially for a boycott that is only scheduled to last for one month.
The potential negative impact would be much greater if companies pulled the plug on a non-substitutable, immediate-impact, easily measurable channel with a goal for direct activation.
For companies like The North Face and Patagonia, I expect that the majority of their Facebook ad spend falls into the category of long-term brand building. For the portion of their Facebook spend that drives direct sales, I expect the ROI is very low. For Ben & Jerry’s — another one of the companies participating in the boycott — the ratio of ad spend on brand building to direct activation is probably even more extreme. Can you buy Cherry Garcia Ice Cream online? Yes, but I assume that channel makes up an insignificant portion of the brand’s total sales; moreover, I would be surprised if even 1% of that small portion is driven directly by Facebook ads.
Let’s review the factors that companies might consider before joining the boycott:
The loss of sales from pulling Facebook advertising — LOW IMPACT.
The positive lift from media coverage of their decision — POSITIVE IMPACT.
The perspectives of their own employees — POSITIVE IMPACT.
My prediction for the types of other brands that will join in the Facebook boycott: companies that have (1) a left-leaning, anti-tech bias among their employees, and (2) a business model that does not rely on paid social advertising to drive direct sales. Which industries fit these criteria? Consumer packaged goods (CPG), bricks-and-mortar retail, automotive, and telecom.
[***June 30 update — my prediction came true! I wrote this article on June 24; since that time, many of the companies joining the boycott came from the industries I identified.]
During the last few days, the following major brands have declared their participation in the “Stop Hate for Profit” campaign: Coca-Cola, Hershey, Unilever, Levi’s, Eddie Bauer, lululemon, Honda, Verizon, and many more.
I compiled a list of brands that joined the boycott. Once I reached 100, I created a simple chart to identify which industries were represented. [***June 30 update — the list now includes 246 companies]
As you can see, the clothing industry (mostly bricks-and-mortar retail) was well represented among the first cohort of companies to join the boycott. The 12 companies in the media category were mostly small and independent, but the 12 CPG companies included some giants like Coca-Cola and Pepsi.
One additional note on this topic: Procter & Gamble indicated they are “reviewing their platforms” and meeting with civil rights groups. I would not be surprised if P&G joined the boycott efforts. If they do, societal pressure might be a contributing factor to their decision, but the primary reason will be financial: previous reports indicated that their paid social advertising was ineffective. Ben Thompson of Stratechery calls this type of political stance a “strategic credit” — the company benefits from a move that made sense for their business anyway (or at least does not hurt them).
Who will NOT be joining the boycott?
Tech companies — even if their employees support social justice causes, they are less likely to oppose Facebook (or other tech companies that rely on ads).
Direct-to-consumer brands — they drive significant revenue from their Facebook spend. In a June 24 article from Modern Retail, investor Nik Sharma outlines the rock-and-a-hard-place situation facing DTC companies:
Politically, most of these [Direct-to-Consumer] brands agree with the notion to stop spending on Facebook. … At the same time, these brands are just as reliant on Facebook to ensure they are hitting things like revenue goals.” He estimated that 60%-80% of most marketing budgets for digitally native brands is on the Facebook platform.
From boycotts to mascots
Right now, the spirit of change in America is palpable. Protests against racial injustice are continuing all across the country. Discussions about police funding have moved from the fringes to the mainstream. According to the New York Times, net support for the Black Lives Matter movement in 2017 was -5%. Earlier this year, the figure shifted to +10%, and over the last few weeks, net support has reached almost +30%.
When social issues trend, many companies issue generic statements (see: “Brands are Deeply Saddened”). But the significant (and growing) change in public sentiment has compelled companies to review their strategies and take immediate action.
A June 21 MarketWatch article summarized a few of the most notable changes:
PepsiCo announced Wednesday that it will remove the image of Aunt Jemima from its packaging and change the name of the brand, acknowledging its racist origins.
On Wednesday afternoon, Mrs. Butterworth’s announced it has “begun a complete brand and packaging review on Mrs. Butterworth’s” ...
Also Wednesday, Cream of Wheat announced “an immediate review of the Cream of Wheat brand packaging. We understand there are concerns regarding the Chef image, and we are committed to evaluating our packaging and will proactively take steps to ensure that we and our brands do not inadvertently contribute to systemic racism,” ... Hours later, Mars Inc., the parent company of Uncle Ben’s rice, said it will be “evolving the visual brand identity.
As we listen to the voices of consumers, especially in the Black community, and to the voices of our associates worldwide, we recognize that now is the right time to evolve the Uncle Ben’s brand, including its visual brand identity, which we will do.”
These four brands have existed for decades — Aunt Jemima and Cream of Wheat actually date back to the 1890s. Iconic brand names and visual identities are never easy to replace. For every person who refused to buy Aunt Jemima pancake syrup due to its racist imagery, there were thousands of customers who had no idea (or concern) about the history of the caricature on its packaging.
Overhauling these brands will require substantial costs. Plus, I expect the loss of market share as regular customers can no longer find their (previously) favorite brands.
Although customer outrage probably influenced the decision to replace the outdated brands, I think the real driver of change was highlighted by the previous quote from Mars, Inc.: “As we listen to … the voices of our associates worldwide.” Once again, companies make politically motivated decisions by considering the perspectives of their own employees.
The majority of young professionals hold socially progressive views. Working for a company with a racist mascot would understandably cause many people discomfort — especially for employees who are directly involved with marketing the brand.
In the same way that tobacco companies need to pay premium salaries to recruit employees, brands with controversial identities might find themselves struggling to attract young graduates.
Over the last few weeks, brands like Aunt Jemima were probably weighing the question of “how much market share will we lose?” against “how costly will it be to retain our employees?” In CPG industries, the calculus changed very quickly.
Shades of complexity
Although companies love to collect strategic credits, they are slower to make changes that might actually hurt their bottom line. Consider the actions taken by Unilever, the multinational consumer goods company. They own the Ben & Jerry’s brand, which quickly joined the “Stop Hate for Profit” campaign. Unilever, however, continued to sell and promote “Fair & Lovely” — a skin lightening cream that is the company’s top-selling personal care brand in India. (Skin lightening creams are extremely popular across Africa and Asia, based on conceptions of social hierarchies and beauty ideals).
How does Unilever rationalize standing against racial injustice in American but selling products that perpetuate cultural stereotypes in India? Quite likely, the company believed that their US employees — even the ones at Ben & Jerry’s — would not be that concerned about the promotion of skin lightening creams, as long as those products are sold on the other side of the globe.
But the world is changing quickly. During a recent Unilever town hall, some employees asked why the conglomerate continues to sell skin lightening cream at all. In response to employee questions, a company spokesperson released a statement:
Fair & Lovely upholds principles that no association should be made between skin tone and a person’s achievement, potential or worth. We’re aware that historic advertising is available on the internet, which is not in keeping with the current values of the brand.
But their own employees kept pressing the issue. And Unilever eventually changed their position. Last Thursday, the company announced they would take immediate steps to re-brand their Fair & Lovely product. A June 25 article in The Wall Street Journal offered some preliminary details:
The owner of Dove soap, Axe deodorant and Hellmann’s mayonnaise on Thursday said it would drop the word “fair” from the brand in the next few months and stop using the words “fair,” “fairness,” “white,” “whitening,” “light” and “lightening” for all its products. It didn’t disclose a new name.
One important thing to note: Unilever is NOT withdrawing the product. The company will continue to sell “NewName & Lovely” — a skin lightening cream that whitens your face. The only changes will be cosmetic (pun intended), with new packaging and messaging. India is Unilever’s second biggest market (after the US), and Fair & Lovely represents 27% of the skin care category in that market. Appeasing employees is important, but removing a skin lightening cream would cause the company to lose one of their largest businesses in Asia.
You can appreciate the merits of Unilever “protesting” Facebook adverting for the full year. As a basic negotiation tactic, you give up something you don’t care about in order to protect your most valuable assets. The more noise Unilever makes about walking away from Facebook ads (which don’t actually provide much value), the less pressure they will face for continuing to the sell skin whiteners (which are a lucrative product).
Do boycotts work?
Now that we’ve identified why joining the “Stop Hate for Profit” campaign poses a low risk for many companies, let’s consider a bigger question: will a boycott have any impact?
Will pulling ads from the social network result in Mark Zuckerberg changing any company policies? Not yet, at least according to a June 26 article in The Wall Street Journal:
Facebook executives in emails and calls with advertisers and ad agencies over the past week have conveyed that they are taking seriously the concerns of civil-rights groups about the proliferation of hate speech and misinformation on its platform. But they are also maintaining that business interests won’t dictate their policies, according to people familiar with the discussions.
"We do not make policy changes tied to revenue pressure,” Carolyn Everson, vice president of Global Business Group at Facebook, said in an email to advertisers last weekend that was reviewed by The Wall Street Journal. “We set our policies based on principles rather than business interests.”
In general, boycotts are NOT effective at achieving their goals. Steven Dubner summarized the consensus findings on an episode of his Freakonomics podcast. One guest — Ivo Welch, professor of economics and finance at the Anderson School at UCLA — explained the conclusions of his research into the boycotts against Apartheid-era South Africa:
We wanted to see if we could really measure the effect [of the boycott], how large it was. And unfortunately, when we started measuring it, we found that it had no impact whatsoever, which made us go back, scratch our heads and start wondering, “Hmm, how would a boycott really work?” And when we started to think about it, it became fairly clear, fairly quickly that the boycott was never really fully enforced; that is, there were always easy ways to get around the boycotts. It was relatively easy to get gold and various other items out of South Africa, sell them within Africa and then sell them further on. So in the end, there were just a lot of different ways to escape the boycott.
Boycotts MAY have some impact on the margin, but as Welch explains, boycotts are so “leaky” that they don’t usually work in their immediate goal of reducing purchases, let alone their ultimate goal of influencing the behavior of the boycotted firm.
During one chapter in my career, I learned that boycotts CAN have a real impact when they target a company’s suppliers or customers, rather than just the company itself. When I led marketing at A Place for Mom, we purchased a lot of “remnant” media. Basically, we bought unsold ad inventory at deeply discounted prices; in many cases, we only paid based on the ad’s performance (i.e., phone calls from a particular ad). As a result of buying remnant media, ads for our senior living referral service would sometimes run on entertainment platforms that were not ideally targeted to our demographic — like hard rock or rap music radio stations. Some of our ads also appeared on television stations and programs that carried political baggage.
We were targeted by left-wing activists for running ads (and therefore “supporting”) conservative talk shows. At the time, we were criticized by right-wing activists for running ads (and therefore “supporting”) Al Jazeera, the Middle Eastern news broadcaster. These boycotts were not aimed at the stations themselves, but rather at advertisers — like us — who were “funding” the stations.
For a while, we never saw any impact from these efforts. Everything changed when the activists adjusted their strategy by targeting suppliers and customers.
One group, for instance, sought to curtail Al Jazeera’s revenue streams. Instead of trying to DIRECTLY boycott APfM for advertising on Al Jazeera, the activist group attempted to INDIRECTLY pressure our company by organizing boycotts, letter-writing campaigns, and marches against other companies that did business with APfM. All of a sudden, CEOs of our major partners were calling us to ask if we “supported terrorism.” Those business leaders were VERY concerned about the idea of protesters marching in front of their communities.
This activist organization found our weak spot. Rather than trying to influence us by marketing to our consumers or even our employees, they began marketing their message to our business partners’ employees.
If the “Stop Hate for Profit” coalition wants to change Facebook’s behavior, they need to find a better leverage point than getting a few retail and CPG brands to pull back advertising for 30 days. Perhaps they need to move their target upstream? I expect that even Mark Zuckerberg — who ultimately still controls all major decisions at Facebook — might bend if he starts losing his best engineers over his policies. That is a far more valuable thing to lose than some ads from an ice cream company.
Keep it simple and stay safe,
Edward
If you enjoyed this article, I invite you to subscribe to Marketing BS — the weekly newsletters feature bonus content, including follow-ups from the previous week, commentary on topical marketing news, and information about unlisted career opportunities.
Edward Nevraumont is a Senior Advisor with Warburg Pincus. The former CMO of General Assembly and A Place for Mom, Edward previously worked at Expedia and McKinsey & Company. For more information, including details about his latest book, check out Marketing BS.
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