By Suzanne Vranica 

Walt Disney Co. has dramatically slashed its advertising spending on Facebook Inc., according to people familiar with the situation, the latest setback for the tech giant as it faces a boycott from companies upset with its handling of hate speech and divisive content.

Disney was Facebook's top U.S. advertiser for the first six months of 2020, research firm Pathmatics Inc. estimates. It joins hundreds of other companies that have paused spending, including Unilever PLC, Starbucks Corp., Ford Motor Co., Verizon Communication Inc. and many small marketers.

Civil-rights groups including the Anti-Defamation League and NAACP called on advertisers to pull ad spending for July, arguing Facebook hasn't made enough progress enforcing its policies on hate speech and misinformation.

Some brands paused spending for longer stretches; the time frame for Disney's pullback wasn't clear. Unlike many other companies, Disney didn't make a public announcement that it was cutting back on Facebook, but instead shifted advertising plans quietly.

The entertainment giant, which is concerned about Facebook's enforcement of its policies surrounding objectionable content, has paused advertising of its streaming-video service Disney+, the people familiar with the situation said. Disney has promoted the service heavily this year and it makes up a substantial portion of the company's spending on marketing.

In the first half of this year, Disney spent an estimated $210 million on Facebook ads for Disney+ in the U.S., according to Pathmatics. Disney was the biggest ad spender during that period. Last year, it was the No. 2 Facebook advertiser in the U.S., behind Home Depot Inc.

Disney also paused spending on Facebook-owned Instagram for its sister streaming service Hulu, a person familiar with matter said. Hulu spent $16 million on Instagram from April 15 to June 30, Pathmatics said.

Other divisions of Disney are also re-examining their advertising on Facebook. Ads for ABC and Disney-owned cable networks such as Freeform have all but vanished from the site. While there are fewer shows to market during the summer, a person familiar with the matter said, it is unlikely that ads will return when new episodes need to be promoted, unless the social platform polices itself better.

Disney representatives had no immediate comment.

"We know we have more work to do," Facebook said in a statement, adding that it would work with civil-rights groups, a leading ad trade group and other experts "to develop even more tools, technology and policies to continue this fight."

Facebook has said it invests billions of dollars to keep its platforms safe and has banned 250 white-supremacist organizations from Facebook and Instagram. It also has said artificial intelligence helps it find nearly 90% of hate speech before anyone flags it.

Earlier this month, the company said it would start labeling political speech that violates its rules and take other measures to prevent voter suppression and protect minorities from abuse.

Facebook has around $70 billion in annual advertising revenue, generated from over eight million advertisers. It would take a sustained boycott from its biggest advertisers to put a significant dent in the company financially.

Some marketers are reducing ad spending broadly because of financial pressures caused by the coronavirus pandemic. Many brands prefer not to cut Facebook ad spending, because they regard it as an especially effective marketing vehicle.

While Disney has been aggressively marketing Disney+ during the pandemic, it has had less reason to market other areas of its business, such as its theme parks unit, which have closed until recently. Disney's movie studio, which is typically a heavy ad spender, has been forced to delay the release of new movies because of theater closures.

Marketers are demanding that Facebook find ways to keep their ads away from objectionable content.

The company, which has been meeting with advertisers and agencies, said late last month that it plans to evaluate the rules publishers and creators must follow if they want to make money from their Facebook content through ads. It will also assess the tools it gives brands to ensure their ads don't appear near inappropriate content. The audits will be handled by industry measurement watchdog Media Rating Council.

Write to Suzanne Vranica at suzanne.vranica@wsj.com

 

(END) Dow Jones Newswires

July 18, 2020 16:40 ET (20:40 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
Starbucks (NASDAQ:SBUX)
Historical Stock Chart
From Sep 2020 to Oct 2020 Click Here for more Starbucks Charts.
Starbucks (NASDAQ:SBUX)
Historical Stock Chart
From Oct 2019 to Oct 2020 Click Here for more Starbucks Charts.