[Click eStock] "Facebook, Limited Impact from Ad Boycott... Rising Expectations for Commerce"

Hana Financial Investment Report: Stock Price Down 8% Due to Boycott
Facebook Still Holds Strong Position in Digital Advertising Market
Online Shopping 'Facebook Shop' Expands...Commerce Expectations Rise

[Asia Economy Reporter Minji Lee] Hana Financial Investment expressed on the 6th that the impact of the advertising boycott on Facebook is expected to be limited. The stock price is anticipated to rebound due to growing expectations for commerce.

Advertising revenue accounts for 98% of Facebook's total sales. Recently, as Facebook has failed to provide adequate filtering functions for inappropriate posts, the number of companies participating in the civic movement #Stop Hate for Profit, which protests the neglect of racism and hate speech, is increasing. It is estimated that about 500 companies, including Coca-Cola and Starbucks, have recently declared a halt to advertising on Facebook and Instagram.

[Image source=Yonhap News]

Seungtaek Hwang, a researcher at Hana Financial Investment, explained, "Considering the diversified advertiser base and Facebook's competitiveness as an advertising channel with a vast user base, the boycott's impact will not be prolonged due to Facebook's policy changes," adding, "Among the top 25 companies contributing to revenue, only three are estimated to be participating in the boycott."

Facebook's position in the digital advertising market remains strong. The monthly active users of Facebook's major services total 3 billion, making it impossible to ignore its competitiveness as an advertising channel. Additionally, Instagram ranked overwhelmingly first (70%) as the most effective platform for influencer campaigns, followed by Facebook.

Currently, Facebook is responding to the advertising halt by companies by applying strict regulations and deleting the ‘Bugeollu’ page, an extreme right-wing extremist movement, in efforts to minimize negative impacts.

Market expectations for commerce should also be considered. In mid-May, Facebook launched ‘Facebook Shops,’ an online shopping feature on Instagram and Facebook, in the U.S. and parts of Europe, and recently expanded the service to eight countries in the Asia-Pacific region, including South Korea.

Furthermore, the collaboration between India’s ‘Jio Platform’ e-commerce platform ‘Jio Mart’ and ‘WhatsApp,’ announced in April, is expected to be a long-term growth driver. Researcher Seungtaek Hwang explained, "The stock price initially plunged nearly 8% at the early stage of the Facebook advertising boycott spread but has recently shown a rebound due to expectations for commerce."