Facebook v Unilever: Porter's Five Forces & CSR in Action

Where does the balance of bargaining power lie between a customer and a supplier? That’s one of the key questions that underpins the announcement by multinational consumer goods giant Unilever that they may stop advertising on social media platforms such as Facebook and Google.

The Guardian reports here on the unease felt by senior management at Unilever about the damage that can be caused by Facebook and other social media platforms “if they fail to protect children, promote hate or create division in society”.

In the same way as Unilever would look to avoid using suppliers of their products which don’t meet their supply chain standards, why shouldn’t Unilever also consider the “suppliers” of a large chunk of their £6.8bn annual marketing spend? Is it consistent with Unilever's CSR strategy to use such advertising platforms?

Unilever’s thinly-veiled threat to cut digital marketing spend on these platforms is a “shot across the bows” of Facebook and the rest. It is presumably designed to encourage them to do more to monitor and police offensive and illegal use of the platforms.

Will it work?

Whilst Unilever’s annual marketing spend makes it one of the top buyers of marketing services, it is still relatively insignificant given the overall spend on social media marketing each year. Porter's Five Forces might determine that Facebook, for example, as the supplier of digital advertising to Unilever has significantly more bargaining power.

As the chart below indicates, Facebook’s global advertising revenues have grown from $764m in 2009 to just short of $40bn in 2017. If Unilever was to cut its Facebook ad spend entirely, it would hardly register on Facebook’s advertising revenues.

However, perhaps Unilever has more bargaining power in this situation than you might expect. If a truly global multinational business that thrives on marketing spend decides that certain social media platforms are to be avoided on ethical / CSR grounds, what effect might that have on other similar businesses? Might they follow in Unilever’s footsteps?

On the other hand, can Unilever afford to miss out on the digital marketing potential of platforms like Facebook and Google. Might a decision like this provide an opportunity to its competitors such as Procter & Gamble?