For companies, the end of neutrality | Opinion

The Facebook ad boycott shows that companies are increasingly being forced to take positions
Though mega corporations are not about to turn altruistic, they are recognising that purpose and profit are interlinked(Reuters)
Though mega corporations are not about to turn altruistic, they are recognising that purpose and profit are interlinked(Reuters)
Updated on Jul 13, 2020 06:49 PM IST
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ByLloyd Mathias

Over the past few weeks, more than 300 advertisers have hit pause on advertising on the world’s largest social media network, Facebook, in response to a call to protest the platform’s refusal to moderate hate speech. Only a couple of weeks earlier, some Facebook executives publicly opposed CEO Mark Zuckerberg’s stance that social media platforms should “not play arbiters of truth”, implying that what appears on the platform has nothing to do with Facebook.

As the boycott intensifies, Facebook — 98% of its revenues come from advertising — seems to have retreated a little. It has since said that it will flag all “newsworthy” posts from politicians and political groups that break its rules. The issue highlights the fact that, for the first time, companies are beginning to actively use their business spends to push for change.

The world over, businesses have traditionally shied away from politics and protests, recognising that it may alienate some stakeholders. The view has always been that it’s better to stay away from controversy, focus on growth, steer clear of sentiments, and avoid offending anyone. Staying neutral and hedging political bets was the norm.

While the lines between business and politics have largely stayed clear, increasingly businesses are being forced to take a position as they define for themselves a larger purpose, beyond making a profit. Younger consumers, particularly millennials, born between 1980 and 1996, a significant demographic across the world, want to know where companies stand on causes that matter. These range from sustainability, racism, discrimination based on religion, nationality, gender, sexual orientation and colourism, some of which are inextricably linked to politics.

Many global companies are larger than countries in economic heft and scale of impact. Consequently, these corporations have become important elements in shaping culture. The brands they own play a big part in influencing consumer behaviour and moulding opinion. This puts the onus on them to proactively do the right thing, even though it may have short-term implications on their bottom line. Companies can put their weight behind key causes, and are increasingly being called upon to do so by a “woke” generation.

Studies indicate that people want to work for a company that has a deeper reason for being, than only profit. A 2019 Deloitte study showed that “millennials would prioritise the sense of purpose around people rather than growth or profit maximisation”. Another survey by Gallup shows that people “look for work that fuels their sense of purpose and makes them feel important”. This, together with the pressure from consumers and activists, are making corporations rethink their views on “staying neutral”.

Though mega corporations are not about to turn altruistic, they are recognising that purpose and profit are interlinked. Businesses that survive and thrive will be those that make a positive impact on the world and create greater prosperity through everything they do. Jim Stengel, a former Procter & Gamble executive, in his book, Grow: How Ideals Power Growth and Profit at the World’s Greatest Companies, shared the results of a 10-year study of 50,000 brands which found that the ones that defined their purpose around improving people’s lives beat their category competitors by significant margins. In the new context, corporate social responsibility (CSR), once relegated to the fringes of business, is now front and centre and integrates deeply into the company’s offerings.

The killing of George Floyd in the United States (US) triggered off mass protests and culminated in the Black Lives Matter movement. Subsequent comments on social media by US President Donald Trump and Facebook’s refusal to flag them led to the #StopHateSpeech movement. Together, they have forced companies to take positions on these divisive issues. Many US companies and CEOs had come out openly in support of the black lives matter movement well before the current Facebook ad boycott. Companies that have remained silent are being called out on social media for their indifference to issues that concern their users. Neutrality is no longer an excuse.

The Facebook ad boycott raises the question as to whether brands will, from now on, use their marketing budgets to make choices beyond commercial ones — comprising reach and the cost of a medium. Will it be appropriate for a brand to buy advertising on a publication, platform or channel that actively preaches hate or is aligned to a divisive agenda? Will a brand’s media choices reflect its intrinsic values and affect consumer choice? Will consumers look beyond just physical brand attributes to evaluate the moral choices a brand makes? These are some of the questions that will be asked of companies sooner rather than later.

In an increasingly globalised world, protests quickly move beyond national boundaries, forcing change over larger geographies. The US-centric debate on racism soon spread to India where colourism is hugely prevalent, getting the country’s largest consumer goods maker, Hindustan Unilever, to announce a name change and revamp the proposition of its nearly five-decade-old fairness cream. A prominent matrimonial website was forced to take off its skin tone filter in response to objections from some users. While corporate-initiated change may not alter age-old prejudices immediately, these clearly are steps in the right direction.

A February 2020 US study published by the Harvard Business Review threw up a surprising finding — that the previously held view of not mixing commercialism with politics may well be gone. In India too, many business leaders are being asked tough questions on where they stand on key issues, and are finding it difficult to look away. In this post-Covid world, where the trust deficit has soared, businesses that put purpose before profit will benefit in the long-run. Consumers will seek out brands that resonate with their values and will reward them with their loyalty.

Lloyd Mathias is a business strategist and an early stage investor
The views expressed are personal
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