Facebook to review content guidelines
Women, Action & the Media has launched a campaign demanding that the social network remove content that has hate speech and violence against women on its website.
By Zacks Equity Research
A group working for gender equality, Women, Action & the Media, launched a campaign last week demanding that Facebook (FB) remove content that includes hate speech and violence against women from its website.
The group urged advertisers to pull their ads in support of the cause. Facebook admitted that its current evaluation system failed to identify and remove the offensive content. It is currently in the process of improving the system and is expected to remove the content from its page.
At least 15 companies, including Nissan Motors and Nationwide Building Society, have reportedly temporarily suspended display of their ads on Facebook.
This is particularly a concern as advertising comprises a significant portion of revenues for Facebook (85% of total revenue). Moreover, Facebook has launched several new advertising products (Lookalike Audiences, Managed Custom Audiences and Partner Categories) for marketers. These initiatives have yielded positive results for the company as its advertising revenues have soared 43.1% year over year in the first quarter of 2013.
According to eMarketer, 64% of the U.S. advertisers have planned to increase their paid social media ad budgets in 2013. Another study by the same firm revealed that digital ad spending in the U.S. will increase in double-digits through 2014. We believe that Facebook's massive user database and investments in the advertiser-pro products could be the prime contender for grabbing a chunk of the ad revenues.
Thus, resolving the current issue is a priority for Facebook and a stricter content evaluation process should be initiated so that such occurrences are averted in the future.
Nonetheless, Facebook remains a formidable force in the online ad market because of its massive user base and its ability to track personal details that advertisers exploit.
However, a volatile macroeconomic environment and increased investments to expand mobile offerings are expected to hurt margins in the near term. Moreover, competition from Google (GOOG) and Yahoo (YHOO) remain headwinds, going forward.
Currently, Facebook carries a Zacks Rank No. 2 (Buy).
More from Zacks
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
The solid report comes a month after the retailer closed all of its Canadian operations.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.