By halting ad spending on Facebook Inc. for a month, Canada’s largest banks are sending a message to the social-media giant that it must do more to curb hate speech and misinformation, but the lost revenue is unlikely to leave much of a mark.
All six of Canada’s big banks, plus Desjardins, confirmed this week that they have paused advertising on Facebook and Instagram until the end of July. The decision puts the banks in step with an international business boycott led by U.S. civil rights groups including the Anti-Defamation League, though a Facebook spokesperson said the banks have not formally joined it.
Two sources at Canadian banks said spending on Facebook would typically make up 5 to 7 per cent of a financial institution’s total marketing budget. Canada’s banks don’t disclose that spending in detail, but in the 2019 fiscal year, Royal Bank of Canada spent $625-million on marketing and public relations, while Canadian Imperial Bank of Commerce spent $359-million on advertising and business development.
Only part of those marketing budgets is used on direct advertising through media, including social and search platforms such as Facebook, Twitter and Google as well as television, radio and newspapers. Ads through Facebook might be 15 to 20 per cent of a typical bank’s “media spend,” according to one senior advertising source, which could add up to $5-million to $10-million annually at some lenders.
The Globe and Mail is not identifying the sources because they were not authorized to discuss the banks’ marketing spending.
That would mean each bank is potentially withholding hundreds of thousands of dollars in spending from Facebook in July – relatively small sums for financial institutions that churn out billions of dollars of profit each quarter, and a small amount for Facebook, which earned more than US$70-billion in revenue last year.
Yet the list of leading companies that have temporarily stopped buying Facebook ads is growing and attracting attention. It includes athletic wear company Lululemon Athletica Inc., and outdoor retailer Mountain Equipment Co-op in Canada, but also global giants like consumer-goods company Unilever PLC and beverage-maker The Coca-Cola Company.
Last week, Facebook chief executive Mark Zuckerberg said the company would tighten its policies against hate speech, including labelling some posts that violate its standards but are deemed newsworthy enough to remain on its platforms. But in a private town hall, Mr. Zuckerberg told employees he expects advertisers that join the boycott “will be back on the platform soon enough,” according to a report from The Information, a news site that covers the tech industry.
“We invest billions of dollars each year to keep our community safe and continuously work with outside experts to review and update our policies,” Facebook spokesperson Meg Sinclair said in an e-mail, adding: “We know we have more work to do.”
Through spokespeople, several banks provided statements that said the decisions to pause ad spending on Facebook were made in keeping with their policies and commitments to promote diversity and inclusion, and to fight racism.
“One way we can do that is by standing against misinformation and hate speech, which only make systemic racism more pervasive,” said RBC spokesperson AJ Goodman, in an e-mailed statement.
Canada’s banks have not indicated whether they intend to resume buying ads on Facebook in August, or what changes they expect from the company before they start spending on ads again. But sources said they are assessing their relationship with Facebook for the rest of this month, and that the pressure exerted by the boycott has caught the tech firm’s attention.
Bank of Montreal is “continuing our ongoing dialogue with Facebook on changes they can make to their platforms to reduce the spread of hate speech,” said spokesperson Sonia Brum, in an e-mail.
Spokespeople for Toronto-Dominion Bank, CIBC, and National Bank of Canada confirmed their banks have stopped advertising through Facebook for July while spokespeople for Bank of Nova Scotia did not respond to a request for comment.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.