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What Investors Should Know About Facebook's Limited Political Ads Ban

Facebook (NASDAQ: FB) founder and CEO Mark Zuckerberg announced Thursday new ways the company says it will help in securing the integrity of the 2020 U.S. presidential election.

· 09/03/2020 16:05

Facebook (NASDAQ:FB) founder and CEO Mark Zuckerberg announced Thursday new ways the company says it will help in securing the integrity of the 2020 U.S. presidential election.

What Happened: In a Facebook post, Zuckerberg said the company would “block new political and issue ads during the final week of the campaign.”

There's a big exception: advertisers will continue to be able to run ads they started running before that final week and adjust the targeting for the ads, the CEO said. 

Why It Matters: Advertising is the key source of revenue for Facebook. In February, eMarketer forecast that political spending would hit $6.89 billion for the 2019-2020 season, an increase of 63.3% from the 2015-2016 election season.

Digital is expected to account for $1.34 billion of the new total, up 203% from the comparative period. The firm estimates that Alphabet Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) and Facebook control 60.8% of the digital ad market in the U.S.

Together the two control 77.6% of political ad spending.

TV ad spending for the political season was forecast at $4.55 billion. That figure could increase if the advertising dollars shift to TV in the campaign's final week.

In a close election, campaigns may be waiting for last-minute ads and will now have to decide where to put them.

Rivals Google and Twitter (NASDAQ:TWTR) could also see gains in political advertising revenue given the shorter Facebook schedule. 

Democratic presidential nominee Joe Biden's campaign has already gotten creative with targeting new markets like video game players though a deal to include campaign signs in Nintendo’s (OTC:NTDOY) “Animal Crossing: New Horizons.”

What’s Next: Facebook shares were down 3.76% to $291.12 at the close Thursday. Shares hit a 52-week high of $304.67 last week. Facebook shares are up 47% in 2020.