Market Overview

Facebook Ad Boycott To Continue, Publicis Predicts As Organic Revenue Drops 13% In Q2

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Facebook Ad Boycott To Continue, Publicis Predicts As Organic Revenue Drops 13% In Q2

Facebook Inc (NASDAQ: FB) advertising boycott is likely to continue, Publicis Group S.A. (OTC: PGPEF) Chairman Arthur Sadoun said at the backdrop of the company reporting earnings for its second quarter this financial year.

What Happened

Publicis is the world’s third-largest advertising group by sales and its chairman feels that the boycott against Facebook is not subsiding, the Financial Times reported Thursday.

“I don’t see it quietening down because I can see the determination . . . of our clients to make things change,” the executive remarked.

Sadoun noted it was too early to say if the campaign against the social media giant would succeed, saying, “The past does not lead me to be optimistic, but I want to be hopeful for the future.”

Why It Matters

The chairman’s remarks came at a time when Publicis reported a 13% drop in organic revenue globally in the second quarter. It posted net revenue of $2.67 billion in the quarter.

Facebook is the second-largest online ads seller after Alphabet Inc. (NASDAQ: GOOGL) (NASDAQ: GOOG), ahead of Alibaba Group Holding Ltd. (NYSE: BABA) and Amazon.com Inc. (NASDAQ: AMZN), the Financial Times noted.

Spending on Facebook advertising fell 32% in the last two weeks of June, according to figures from Social Bakers, a social media marketing firm.

This week Walt Disney Co (NYSE: DISquietly joined the Facebook advertising boycott, alongside Unilever NV (NYSE: UN), Starbucks Corporation (NASDAQ: SBUX), and Verizon Communication Inc (NYSE: VZ).

The ad spending cuts at the social media platform are coming at a time when the pandemic has squeezed the revenues of a majority of companies. Market forecaster Magna, owned by The Interpublic Group of Companies, Inc (NYSE: IPG), predicts global advertising spending to decline by 12.8% in 2020 to $144 billion, the Financial Times reported.

Price Action

Facebook shares traded 0.26% higher at $240.5 in the pre-market session Thursday. Publicis OTC shares closed 4.72% lower at $30.92 on Wednesday.

 

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