uploads/2020/07/Facebook-campaign-ads.jpg

Why Facebook May Stop Accepting Trump’s Campaign Ads

By

Updated

Facebook (NASDAQ:FB) is discussing a potential ban on 2020 campaign ads on its platforms days before the November vote. A ban would see Facebook stop accepting money from Donald Trump’s and Joe Biden’s campaigns.

The campaigns have been splurging on Facebook political ads ahead of the November presidential election, spending about $30 million on Facebook ads over the past 30 days. Mike Bloomberg also spent big on Facebook campaign ads in his short-lived presidential bid. The 2020 campaign presented a $9.8 billion advertising revenue opportunity for Facebook. 

Facebook explores curtailing campaign ads to fight misinformation

Facebook executives have not made up their mind about banning campaign ads to curb misinformation about election topics. Last year, the Biden campaign took Facebook to task over a controversial Trump campaign ad about the Biden family.

Facebook, Google, and Twitter came under fire following the 2016 presidential election over campaign misinformation. Specifically, the platforms faced criticism for allowing Russian entities to target US voters with campaign propaganda on their platforms. Twitter responded by donating the revenue it earned from selling ads to Russian entities implicated in the political misinformation campaign. 

To stay clear of any political controversies, Twitter stopped selling campaign ads last year. Google, also having learned its lessons from the 2016 election cycle, decided to restrict political advertising on its platforms. TikTok, currently risking a US ban over China ties, also gave campaign ads a wide berth. But Facebook bucked them, instead keeping an open arm for campaign ads.

Facebook has faced criticism over how it handles ads, with CEO Mark Zuckerberg facing charges of cutting a deal with Trump to support the president’s re-election. Although Facebook director Peter Thiel was closely involved in Trump’s 2016 presidential campaign, the Zuckerberg confidant has sought to distance himself from Trump’s 2020 campaign

The Trump factor and ad boycott

Trump may be a big spender on Facebook campaign ads. But the president is also the reason Facebook is facing an ad boycott. More than a thousand brands, including Coca-Cola and Unilever, have suspended advertising on Facebook platforms. The ad boycott campaign seeks to compel Facebook to do more to combat hate speech and misinformation on its platforms.

The ad boycott began after Trump published controversial posts on Facebook and Twitter. While Twitter slapped the posts with warning labels, Facebook left them untouched, angering some civil rights groups. More recently, Facebook has stepped up its crackdown on misinformation. Last week, it removed dozens of pages linked to Trump advisor Roger Stone

Doesn’t live on campaign ad money

Serving campaign ads has long presented a delicate balancing act for Facebook. Consequently, the company has considered ditching the political ad business.

Although it derives most of its revenue from selling ads, it doesn’t make big money from campaign ads. For example, Facebook has sold little over $1.5 billion in campaign ads in the US and Canada since May 2018. That is a drop in the bucket considering Facebook generated $8.6 billion in advertising revenue in these regions in the first quarter of 2020 alone. 

Finally, FB stock has jumped about 20% year-to-date, adding about $15 billion to Zuckerberg’s net worth and bringing it to $93 billion. Amazon’s Jeff Bezos has added about $75 billion to his wealth this year, bringing his total net worth to $189 billion. His net worth has also soared alongside Amazon stock, which has gained more than 70% this year.

More From Market Realist