Facebook, Inc. (NASDAQ: FB) already faced a large drop in ad revenue as clients pulled campaigns. Hate speech on the site had become both a dangerous environment and one that advertisers want to avoid as a means of protest brands. Facebook appeared to weather the problem because the ads pulled compared to the Facebook’s total volume of ads were small. However, The Walt Disney Company (NYSE: DIS) has pulled a large volume of its ads, a very visible sign that large companies have turned against Facebook.

Why Disney Matters

The Wall Street Journal reports that Disney spent $210 million on Facebook for its Disney+ streaming service over the course of the first half of the year. In the scheme of things, this is small for Facebook. It had revenue of $17.7 billion in the first quarter of the year, on which it made $4.9 billion, up an extraordinary 101% from the same quarter in 2019. The company listed 2.99 billion “Family monthly active people”, a meaningful percentage of the world’s population. Cash and marketable securities totaled about $60 billion.

But, raw dollars is not Facebook’s problem, yet. It is that major global brands have begun to boycott the service. This makes management at other companies who represent different brands ask if they want to associate with Facebook. A domino effect could begin, and the list of boycotting companies could turn from a handful into several hundred. Facebook may be a critical media platform to reach hundreds of millions of people. However, marketers may see if they can “buy around” it, primarily with larger budgets on Google, the largest ad platform in American, and Amazon.com, Inc, (NASDAQ: AMZN) which has a growing presence in global advertising.

If Disney finds other places to run its ads, the word will get out that there are true alternatives to Facebook.

How Long Can Founder Mark Zuckerberg Wait?

Facebook CEO and Founder Mark Zuckerberg has made a simple case to marketers which obviously has not worked. As Facebook presented earnings, he said: “With people relying on our services more than ever, we’re focused on keeping people safe, informed and connected.” The “safe” part of that has not resonated with marketers or the media.

Zuckerberg’s most recent move to quell the problem is to meet with a large number of advertisers to allay their concerns. They came away with comments that he had done very little to defend Facebook’s decision.

Zuckerberg is a billionaire a number of times over, and he has the controlling block of Facebook stock. He does not have to listen to his board, the public, or marketers. So, he can do as he pleases as the protests against his company rise.

Are Stockholders The Group That Matters?

One major fallout from the loss of advertisers is Facebook’s share price. It has underperformed the market in the last month. For years, it has been one of the stock markets mega-cap winners. Maybe if the protest from stockholders gets loud enough he will do what he has not done for companies like Disney.

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