Facebook no stranger to howls of outrage from advertisers

Facebook not only gets away with it but usually prospers after the sanctions fade, and it grows even stronger.

Over a long autumn weekend almost 20 years ago, a second-year psychology student sat down in his dorm room and wrote some software. That simple piece of code compared the headshots of two Harvard students and asked other students to vote who was “hot” and who was “not” from the side-by-side comparison.

The idea was to quantitatively rate all the students at Harvard on “hotness” and come up with an ­ultimate ranking. Facemash — the site the young programmer was working on — opened on October 28, 2003. And closed less than a week later.

Its programmer, a 19-year-old student called Mark Zuckerberg, had hacked into Harvard’s security site to get all the headshots needed to make the site run. He was guilty of brazen violations of his student honour code, copyright law and intellectual property, and faced expulsion from the university. But all charges were eventually dropped.

Facemash was consigned to history and Zuckerberg turned his attention to a bigger, more ambitious project. The creation of a new website that would launch a few months later. A website he would call The Facebook.

The rest is history. But this early excerpt from the origin story of what would become one of the world’s most important companies illustrates two key themes about Facebook. First, that the brand is as associated with transgression and rule-breaking as it is with coding and technology. Second, despite these transgressions, Facebook not only gets away with it but usually prospers after the sanctions fade, and it grows even stronger as the months pass.

Each time a major organisation boycotts Facebook or angered users announce, with righteous indignation, that they are leaving the site forever, two things usually happen. First, all of those who swore they would never return to the platform return. Second, business not only returns to normal, it leaps ahead and passes another gigantic milestone.

Facebook attracted $US70bn ($102bn) worth of advertising and 2.3 billion active users last year.

But this time the threat feels different. Enraged by a company that seems to turn a blind eye to both misinformation and hate speech, a growing number of brands are walking away from the platform. First it was Patagonia. Then Verizon. Now Unilever and Coca-Cola.

The move has forced Facebook to act. A flurry of emails from its HQ to major advertisers last week attempted to reassure marketers that the company’s focus was now on “removing hate speech and content that harms communities”. Facebook’s marketing chief, Carolyn Everson, released a statement indicating she was discussing the issues with advertisers and searching for a way for Facebook to be a “force for good”.

The concerted response indicates the company is genuinely rattled by the response of advertisers. “There’s a growing awareness that this isn’t a brand safety issue anymore — it’s a societal safety issue,” Stephan Loerke, chief executive of the World Federation of Advertisers, told The New York Times last week.

The financial markets are similarly concerned. On Friday, $US55bn was wiped from Facebook’s value. That’s a single-day loss greater than the total market value of Telstra, Rio Tinto and Caltex combined.

And there is another issue that makes Facebook flightier now than in the past — one that is completely of its own doing. Last year, Facebook pulled all its brands ­closer together. Instagram and messaging site WhatsApp are now both endorsed by Facebook. That means that under the Instagram logo on its platform there are the eponymous words “from Facebook”. The platforms now share more back-end processes too.

That’s a smart move by Zuckerberg, who is desperate to avoid being asked by any future Democratic government to separate and spin off some of his all-powerful empire. But it now means that advertisers are not only withdrawing ads from Facebook, but also from Instagram, which accounted for almost 30 per cent of Facebook’s revenues last year and which, traditionally, would have soaked up money moving from Facebook.

Finally, there is the not inconsiderable issue of an incoming recession to worry Facebook too. Marketers the world over are looking to cut back on their advertising spend.

The current boycott of Facebook could provide many of them, big and small, with the easiest method of reducing their current advertising budgets.

The 55-billion-dollar question is, of course, whether the advertisers will eventually return? A review of most of the brands pulling advertising from Facebook reveals that, with the exception of Unilever, which has stopped advertising until the end of 2020, most of the other corporate boycotts last until the end of July, no longer.

Advertisers, like Facebook, have been here before and everyone knows how this boycotting process has to work. They throw their toys out the window. Facebook listens and issues conciliatory messages. Advertisers return. Repeat until exhaustion.

But the reality of Facebook’s “long tail” is that most of its eight million advertisers are small businesses that would once have used classified advertising to promote their wares. These businesses tend to be less worried about societal change and their own corporate reputation.

No one is quite sure if — in this very strange period — it will be different this time around. Or whether Facebook, a brand that was born into a crucible of controversy and transgression, will emerge unscathed and resume its growth ­trajectory all over again.