Is Facebook Too Big to Unlike?

Despite misstep after misstep, the social media giant is still standing, and may remain too big for marketers to ignore

By John Wolfe

Joe Saget/Getty Images

It hasn't been a good year for Facebook.

Over the past 12-plus months, the massive social media platform has been the target of outrage over a string of alleged privacy and brand-safety abuses. Marketers and consumers have both taken notice, and the upshot of their concern is both good and bad news for the social media giant.

Advertisers have had a wide range of issues with Facebook for years. But the platform's current spate of problems can be traced back to last year when it was revealed that Cambridge Analytica, a political data firm hired by President Trump's 2016 election campaign, gained access to private information for 50 million Facebook users to identify their personalities and influence their voting behavior.

In another incident, NBC News revealed in April that Facebook CEO Mark Zuckerberg "oversaw plans to consolidate the social network's power and control competitors by treating its users' data as a bargaining chip, while publicly proclaiming to be protecting that data, according to about 4,000 pages of leaked company documents largely spanning 2011 to 2015."

The list goes on:

  • For months Facebook has been the target of complaints about a number of its accounts spreading fake news and perpetuating hoaxes to influence political races around the world, as well as the existence of hate pages spreading racist and anti-Muslim rhetoric and extremist political views. It's also come under attack for the posting of videos showing extreme acts of violence, including mass shootings.
  • In April, Wired ran a long article headlined, "15 Months of Fresh Hell Inside Facebook," which included a quote from a speech the billionaire financier George Soros made at the recent World Economic Forum in Davos, Switzerland. "Mining and oil companies exploit the physical environment; social media companies exploit the social environment," Soros said. "The owners of the platform giants consider themselves the masters of the universe, but in fact they are slaves to preserving their dominant position … Davos is a good place to announce that their days are numbered."
  • In April, Facebook said it expects to be fined up to $5 billion by the Federal Trade Commission for privacy violations, a record amount against a technology company and an indication that the U.S. government is getting more involved.

Even a former member of the Facebook family has weighed in on the situation. Facebook co-founder Chris Hughes penned an Op-Ed article for The New York Times in May in which he suggested it was time for the U.S. government to step in and take action regarding Facebook's alleged misdeeds.

On top of everything else, Facebook is also apparently having trouble delivering the most precious commodity that advertisers look for: eyeballs.

"For too long, lawmakers have marveled at Facebook's explosive growth and overlooked their responsibility to ensure that Americans are protected and markets are competitive," Hughes wrote. And later: "We are a nation with a tradition of reining in monopolies, no matter how well intentioned the leaders of these companies may be. (Facebook CEO Mark Zuckerberg's) power is unprecedented and un-American. It is time to break up Facebook."

Hughes is not alone. Democratic presidential hopeful Sen. Elizabeth Warren (D-Mass) has called for Facebook to divest itself of its Instagram and WhatsApp properties. Any or all of those moves would immediately increase competition for ad dollars and decrease Facebook's overall dominance and influence.

On top of everything else, Facebook is also apparently having trouble delivering the most precious commodity that advertisers look for: eyeballs. A new report from eMarketer indicates that consumer engagement with the platform is decreasing. U.S. adult users' time spent on Facebook declined last year, according to the study, and is expected to be flat for the next few years. (See figure 1.) At the same time, however, the report also noted that engagement time with Facebook property Instagram is growing.

FIGURE 1

Average U.S. User Time on Facebook Is Expected to Drop, Remain Flat

Minutes per day

 
note: Data reflect users in the U.S., ages 18 or older, who use each platform at least once per month. Time spent with each medium includes all time spent with that medium, regardless of device or multitasking. For example, one hour of multitasking on Facebook while using Snapchat is counted as one hour for Snapchat and one hour for Facebook.
source: April 2019, eMarketer study

These developments — and the accompanying negative press coverage — are eroding Facebook's viability as an advertising vehicle, according to marketing industry observers.

"Based on the qualitative research I have done in the past few months, advertisers are definitely starting to become more cautious about Facebook," says Debra Aho Williamson, principal analyst at eMarketer. "They may not be pulling budgets or cutting spending, but they are far more attuned to Facebook's challenges and issues than they were a few years ago. They are maintaining their ad support on Facebook, but they are also preparing for additional changes in targeting."

Jeff Greenfield, COO and co-founder of C3 Metrics, a cross-channel attribution provider, agrees: "Compared to 2017 and 2018, Facebook is not as viable," Greenfield says. "Cambridge Analytica forced Facebook to make additional targeting restrictions, and the overall performance for Facebook today is over 40 percent worse. In an era that is calling for more transparency, there is a business danger because the walled garden makes it harder to measure. Right now, Facebook has lost the most important thing to large brands: trust."

 

Marketers Are Holding On, Despite Issues of Trust

At the same time, and despite the myriad allegations, most marketers say Facebook remains a key ingredient in any comprehensive, integrated marketing plan. Reasons for the discrepancy vary, but mostly come down to Facebook's incomparable reach as a communications tool and that the platform says it is actively taking steps to address and solve each of the controversial issues it faces.

"The advertisers we have spoken to over the past few months say that the combination of Facebook's massive scale and its precise targeting capabilities still make Facebook a must-buy," says eMarketer's Williamson. "Facebook's ad tools are simple to use, the measurement capabilities are strong, and the effectiveness of the advertising is high. All of these things lead advertisers to tell us that Facebook is as essential a partner today as it was a few years ago.

Another reason Facebook remains popular among many advertisers is its success rate.

"While many advertisers still can target demographically … advertisers who target users based on their interests will see better ad performance."
— Dan Goldstein, president at Page 1 Solutions

"Facebook has been incredibly successful at selling brands on their ability to drive not just brand engagement but brand outcomes — not just clicks and likes, but business growth," says Scott Tieman, global head of programmatic services at Accenture Interactive. "In the past few years, our clients have more than tripled their utilization of Facebook for direct response or performance objectives. If Facebook continues to transparently prove to brands that it's driving material business results and doing so across more of its platform — feeds, stories, and messaging and Facebook, Instagram, and WhatsApp — demand will continue to grow."

Dan Goldstein, president of website marketing agency Page 1 Solutions, says advertisers who understand that context, not demographics, drives conversions view Facebook as a valuable tool to reach their target audiences.

"While many advertisers still can target demographically, certain advertisers may not target users based on characteristics such as age, gender, and race because of increasing scrutiny around potential discrimination issues," Goldstein says. "Advertisers who target users based on their interests will see better ad performance."

Tony Pace, a former ANA chairman who is now a principal at marketing consultancy Cerebral Graffiti and president and CEO at the Marketing Accountability Standards Board (MASB), agrees: "Facebook has two things going for it that may help it navigate the issues it has faced for over the past year — scale and efficiency. Businesses built a following, often a large one, using the Facebook platform and have used it successfully and efficiently. Building, or attempting to replicate that following elsewhere, would require time and investment — two resources that are in short supply."

A move toward privacy would alter Facebook's business model considerably and could even improve its efficacy for marketers.

Despite those votes of confidence, most experts agree that Facebook's trust problem must be addressed seriously and credibly in order for the platform to truly rehabilitate its overall image.

"Facebook is in a tough spot now that it's lost a lot of trust," says C3 Metrics' Greenfield. "Capped off with a multibillion-dollar FTC fine, it will be hard to undo that. Facebook will need to reevaluate its core business and figure out how to rebuild consumer trust."

To that end, Facebook has taken several steps to restore trust, including an announcement in May that it had taken down 2.2 billion fake accounts between January and March, only slightly less than the almost 2.4 billion monthly active users Facebook boasts globally. In June the company said it will boost ad spending on a campaign to restore its reputation and regain user trust. The social giant has also instituted new policies designed to reduce the amount of political misinformation available on the platform, and just recently said it's making efforts to weed out posts with misleading healthcare claims, although critics say those are not working as well as they should.

 

A Shift Toward Privacy Could Yield Benefits for Marketers

Another step that Facebook says is coming is a new plan to make the platform more private for users, a step that could have major implications for advertisers.

In March, Zuckerberg announced that rather than public posts, he wanted to shift Facebook's focus to private and encrypted communications in which users message small groups of people they know. These types of communications could also be deleted after a certain period of time, he said.

In an interview with The New York Times, Zuckerberg said: "We're building a foundation for social communication aligned with the direction people increasingly care about: messaging each other privately." In a later blog post, Zuckerberg added, "I believe a privacy-focused communications platform will become even more important than today's open platforms."

Such a move toward privacy would alter Facebook's business model considerably and could even improve its efficacy for marketers.

"By offering more privacy to its users, Facebook's traditional advertising revenue will be impacted, so the platform will look to nonadvertising revenue models like dating and classified listings," C3's Greenfield.

Page 1 Solutions' Goldstein adds: "The tech industry is moving in a privacy-focused direction, so this should be a welcome announcement to consumers. Naturally, more privacy may affect advertising capabilities, but the presence of users who find a Facebook that matches their expectations will make for a willing, engaged audience for advertisers."

Williamson at eMarketer says that, although Facebook has yet to share many details of how its vision for privacy will be implemented, all signs point to an increased focus on Stories, Messenger, Instagram, WhatsApp, and Groups.

"Messenger in particular is an app that is going to get more attention," Williamson says. "At the recent f8 conference, Mark Zuckerberg showed one feature still in development that would enable people to use Messenger to view their friends' activity not only on Messenger but also on Facebook, Instagram, and WhatsApp, all from one central place. This sort of move, if implemented as it was shown, would drive engagement with Messenger and lead to more available ad impressions."

Still, Williamson offers one of the most succinct assessments of Facebook's overall role in today's media and marketing landscape, which is not likely to change: "Facebook's one-two punch of size and targeting is something that no other ad venue can really match, and that makes it difficult to come up with a true, viable alternative to Facebook."

 


 

You must be logged in to submit a comment.