The ad boycott against Facebook this past summer had little impact on its bottom line.
But the boycott did appear to create an opportunity for second-tier social media platforms, such as Snapchat and Pinterest.
“A large share of the accelerated growth we saw from those companies in the third quarter [of 2020] was almost certainly a shift of spending from some large brands out of Facebook and onto other platforms,” said Brian Wieser, global president of business intelligence at GroupM.
While direct response and small business demand flooded in to fill any void left by larger brands taking a public stand on Facebook, (just look at Facebook's ad revenue in Q3 and Q4), the aftereffects of the boycott showed up in Snapchat and Pinterest’s strong financial results.
“Facebook’s proverbial ‘crumbs’ are someone else’s ‘cake,’" Wieser said.
Break me off a piece
Clients of Dentsu-owned Merkle, for example, allocated a larger share of their paid social spend to Pinterest (up from 7% to 17%) and Snapchat (up from 8% to 17%) in Q3 of last year compared with the second quarter.
In Q4 2020, performance agency Tinuiti, whose clients include Bombas, Etsy, Rite Aid and The Honest Company, saw Pinterest adoption among its advertisers shoot up 117% year over year, while Snapchat adoption grew 67%.
Nearly a quarter (24%) of Tinuiti’s advertisers who participated in the July boycott reallocated at least some of the spend that would have gone to Facebook to other social media platforms, said Andy Taylor, the agency’s head of research.
Snapchat and Pinterest were the two most popular beneficiaries of the dollars previously earmarked for Facebook, he said.
“While the desire to diversify brand exposure to new social platforms has been steadily gaining steam with advertisers over the last couple of years, the July boycott made it even more important,” Taylor said.
Playing for keeps
Having attracted this incremental budget, though, Snapchat and Pinterest now need to retain it.
“It’s up to the receiving platforms to hold onto the budgets and find ways to justify them, creating a new plateau for future growth," Wieser said.
Based on their respective Q4 results, both Snapchat and Pinterest seem poised to make that happen.
Snapchat doubled its number of paid advertisers in the fourth quarter, with revenue clocking in at $911 million, a 46% YoY uptick which accounted for a large chunk of Snapchat’s full year 2020 revenue of $2.5 billion.
Pinterest, meanwhile, beat expectations for the fourth quarter with $706 million in revenue, up 76% YoY, driven by healthy advertiser demand throughout the holiday season.
During its third quarter earnings call, Pinterest told investors that it would be hard to quantify the “tailwind” from the July boycott, but that it appeared “this group of advertisers accelerated their spend on Pinterest in Q3.”
Jeremi Gorman, Snap’s chief business officer, said in late July that the boycott “opened the door” for more conversations at the CEO and CMO level.
To be fair, though, Snap and Pinterest aren’t just after Facebook’s crumbs. Both have been actively investing in innovation and technology, such as Snapchat Spotlight, which has already amassed around 100 million users, and shopping ads and automation tools on Pinterest.
“Snap in particular has done such a good job of rolling out their direct response and performance advertising features, which has helped them do well organically during the pandemic,” said Debra Aho Williamson, a principal analyst at eMarketer. “Some of Snap’s growth during this period comes from just being a better and more suitable platform than it used to be for DR.”
Never let a good crisis go to waste
A crisis or a high-profile news event, however, like the social media ads boycott this past summer, can be the nudge advertisers need to change their spending patterns, propelling a channel into a more stable spot on the media plan.
Snapchat and Pinterest aren’t new platforms. But some advertisers still consider them to be not necessarily experimental, but also not a staple.
“What gets an emerging platform out of the experimental budget bucket? It can be a moment like the boycott,” said Dan Salmon, managing director of BMO Capital Markets, who noted that it’s not unlike getting his eight-year-old child to sample a new food.
“Once he finally tries it, he usually likes it,” Salmon said. “The equivalent is, ‘Oh, huh, Snapchat audience profiles actually work pretty well, I guess I’ll keep doing this.’”
But it’s not a totally clean narrative.
Advertisers may say they want to diversify their budgets, but where they spend their money in a given quarter doesn’t always reflect that intention.
Although Pinterest and Snapchat’s share of spend among Merkle’s advertisers was up between Q2 and Q3, it dipped between Q3 and Q4 – from 17% to 14% on Pinterest, and from 17% to 12% on Snapchat.
Some of this spend may have found its way back to Facebook, but that shift isn’t necessarily an indicator of waning interest in Snapchat and Pinterest, said Melissa Reilly, associate director of performance media and marketing communications at Merkle.
CPMs in Q4 rose on both Facebook and Instagram for the first time since the first quarter, she said, and “having to pay more for each impression on those major platforms could mean that spend shifted away from those smaller platforms to fund the more expensive CPMs."
Long term, though, a platform’s ability to keep ad budget depends on whether it helps advertisers meet and exceed their KPIs, said Amanda Grant, VP, managing partner and global head of social at GroupM.
To continue growing or maintain an investment, she said, a platform needs to be competitive in the auction, have ad product innovations and offer brand safe and verifiable measurement options.
And that, Grant said, is the “biggest hurdle” of all.