Publicis predicts advertisers’ Facebook boycott will continue

The head of Publicis, the world’s third-biggest advertising group by sales, has predicted that big brands will continue their boycott to press Facebook to root out hate speech but said it was too soon to tell whether the campaign would succeed.

“I don’t see it quietening down because I can see the determination . . . of our clients to make things change,” Arthur Sadoun, chief executive, said in an interview.

Since June, hundreds of big companies including Verizon, Unilever, Danone and Microsoft have paused marketing on the social network, joining a protest started by civil rights advocacy groups in the US amid the Black Lives Matter protests.

The boycott caused advertising spending on Facebook in North America to decline 32 per cent in the last two weeks of June, according to Social Bakers, a social media marketing company.

Facebook is the second-biggest seller of online ads globally after Google, ahead of Alibaba and Amazon.

Asked whether the boycott would peter out as similar movements by advertisers in recent years have done, Mr Sadoun said: “The past does not lead me to be optimistic, but I want to be hopeful for the future.”

In 2018, some advertisers pulled spending after the Cambridge Analytica scandal exposed Facebook’s weak privacy controls, while Google’s YouTube video site has faced separate boycotts in protest at extremist and child exploitation content.

The Facebook boycott comes as big companies are cutting back on their marketing spending to cope with the global recession brought on by Covid-19. Magna, a market forecaster owned by Interpublic Group, has predicted that global advertising spending will fall by 12.8 per cent this year, to $144bn.

For Publicis, the downturn translated into a 13 per cent decline in like-for-like sales, on revenue of €2.3bn, in the three months to the end of June. However, analysts had expected a 20 per cent like-for-like contraction and sales of €2.2bn, according to a consensus of estimates compiled by the company.

The steepest decline came in Europe, where like-for-like revenue dropped 23.5 per cent to €510m. In North America it fell 7.6 per cent to €1.5bn and in Asia decreased 5.7 per cent to €215m.

Net income in the second quarter fell by 10 per cent to €417m, despite a cost-cutting drive that squeezed out nearly €286m in savings from a recruitment freeze, elimination of freelance work and other cuts to general expenses.

Publicis did not give any financial guidance for the second half of the year because of the uncertainty stemming from the pandemic.

Mr Sadoun said the group’s “strong fundamentals” would help it weather the crisis. He added that it was being helped by its stronger US business, which accounts for 60 per cent of sales and where it has won new clients such as beauty retailer Sephora. Like-for-like sales in the US fell by only 6.8 per cent in the second quarter, better than the 18 per cent decline that forecasters had predicted.

Publicis shares are down 32 per cent this year, while WPP’s have fallen 42 per cent. The second-biggest player, US-based Omnicom, has also seen its shares fall 32 per cent, while Interpublic’s are down 23 per cent.

Additional reporting by Hannah Murphy in San Francisco