Sunday July 05, 2020 |Notes

The Facebook ad boycott will benefit d2c in the short run

The businesses that are boycotting Facebook ads have many streams of customers and do not rely solely upon Facebook. Most of facebooks advertisers rely heavily upon Facebook ads to generate traffic, and thus, revenue.

As Ben Thompson points out in the short term, this decreases the costs to display ads to any given user.

in an auction-based system, less demand corresponds to lower prices — the companies that are the most likely to take advantage of those lower prices are those that would not exist without Facebook, like the direct-to-consumer companies trying to steal customers from massive conglomerates like Unilever.

As previously discussed on this blog, the boycott will not hurt Facebook. The ad system is designed for strength by the lack of dependence on any one company.

In the short term, the companies that most rely on Facebook are heavily incentivized to take advantage of this opportunity. This leads to increased competition and a return to norm in the longer run, with or without participation from large brand awareness campaigns.

Facebook continues to be a gateway of access to consumers. There's an opportunity presented by large companies abstaining and it will be short-lives.

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