Home Depot, Omnicom face shareholder questions over advertising's role funding hate speech

Dive Brief:

  • Home Depot and Omnicom are facing tough questions from shareholders over whether their social media advertising helps finance online hate speech and disinformation. Shareholder resolutions were filed against both companies in an effort coordinated by Open MIC, a nonprofit corporate accountability group that shared details of its actions in a press release late last week.
  • The resolutions were originally put forth in November, but the issues have taken on fresh urgency in the wake of riots at the U.S. Capitol earlier this month. The Nathan Cummings Foundation, a shareholder in Omnicom, filed the resolution against the agency conglomerate, while Myra K. Young, an individual shareholder in Home Depot, filed against the home improvement retailer.
  • Direct pressure from investors on companies to reexamine their digital advertising strategies could become more common as social media continues to play a clear role in fueling real-world violence while platform advertising revenue soars.

Dive Insight:

Home Depot, a heavy social media spender, and Omnicom, which operates one of the largest media-buying operations in the world, are under a harsh spotlight in the wake of an insurrection at the Capitol building earlier in January. While the resolutions coordinated by Open MIC were put into motion in November, the nonprofit has chosen to go public with the details now, as greater scrutiny is put toward social media’s role in allowing the riots to come to fruition.

“The insurrectionists apparently used social media platforms to organize last week’s violence at the Capitol — and are continuing to do so,” Young said in a press statement. “That’s why we need to scrutinize the business model of these social media platforms. Advertisers should not be exempt from that same scrutiny.”

Platforms like Facebook, Twitter and Google have seen mounting criticism in recent years for failing to tamp down on the spread of hate speech and disinformation, but continue to post strong revenue gains. More attention could turn to individual advertisers and media buyers that keep those profit engines running, and shareholders could be a powerful tool in putting pressure on companies to enact changes and introduce more stringent standards. Open MIC claims its moves mark the first time shareholder resolutions have been filed against social media advertisers on such grounds.

The resolution against Home Depot cites Pathmatics data that claim the retailer spent $179 million on Facebook ads in 2019, making it the platform’s top advertiser. Pathmatics estimates the retailer continued to be one of Facebook’s biggest spenders last year, but did not join a #StopHateforProfit boycott against the social media giant that emerged amid mass protests for racial justice last summer.

Home Depot contests the Pathmatics findings on its Facebook spend, believing the brand is not “even close to being the largest advertiser on Facebook,” a spokesperson said in an emailed statement. The spokesperson said Home Depot was “saddened and outraged” about the attacks on the Capitol and is addressing the resolution through appropriate processes.

“We’re disgusted by hate speech and discriminatory content we see on social media and never intend for our ads to end up on sites that promote hate or misinformation,” the spokesperson said.

The shareholder resolution submitted to Omnicom noted that the group, which owns shops like BBDO, TBWA Worldwide, DDB Worldwide, is the world’s second-largest ad holding company, managing an estimated $38 billion in annual client expenditures. Several of those clients, such as Disney and Apple, are major spenders on platforms like Facebook and Google’s YouTube, per the resolution.

In response to emailed questions about the resolution, a spokesperson for Omnicom detailed the work the agency has done in recent years to combat hate speech and misinformation. Last July, as the movement for racial justice continued to command the national conversation, the company’s Omnicom Media Group arm formed the Council on Accountable Social Advertising (CASA), a coalition of social media platforms, practitioners and marketers that looks to bring the same level of accountability and transparency to digital advertising that exists on traditional media channels.

CASA immediately conducted an audit of all the major social media platforms to see if they upheld individual and client standards around brand safety. Omnicom said the platforms have agreed to the remedies CASA identified to fill gaps in content controls, and that the group will continue to track the platforms’ progress and enforce those guidelines.

“Omnicom is committed to ensuring our client’s ads do not appear next to harmful content on social media platforms while holding them accountable to the ethical standards our clients are demanding and with which we are aligned,” the spokesperson said over email.

Home Depot and Omnicom could block these resolutions by arguing against their merits to the Securities and Exchange Commission, as Open MIC pointed out. Otherwise, the proposals will be put up for vote at each companies’ respective annual general meetings in the spring.

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