Rewards Worth the Risk for Facebook Advertisers

Kali Hays

Updated Fri, May 25, 2018 at 4:01 AM UTC

Facebook is running something of a mea culpa campaign promising to be more proactive on privacy, fake ads and accounts, but the engine of its profitable empire, advertisers, are still unsure what it all means.

“Here together” is the tag for Facebook’s new commercial, which explains in rather sentimental terms that the platform “came here for the friends” but ended up having to “deal with…spam, clickbait, fake news and data misuse.” There are also physical ads popping up explaining that fake accounts are being deleted and, in its first “transparency report,” (which is a little too vague for such a title), it boasted the deletion of 865 million posts during the first quarter that were mainly spam.

There’s been almost no talk of advertising, however, and how an industry that’s come to rely on the user insights and easy consumer access Facebook had to offer will be moving forward in light of these changes and others focused on restricting, in some capacity, third-party access to users’ data. For now it seems lack of consumer outcry over the Cambridge Analytica scandal, outside of a few high-profile tweets pushing the deletion of Facebook profiles, which lost any oomph when there was no similar campaign to delete Instagram, seems to be at the crux of an industrywide shrug. Usually brands are quick to pull an ad, be it from a high-profile endorser or a TV program — but it seems not a single brand has left Facebook or Instagram.

“I don’t even think we’ve gotten many client questions [about Cambridge Analytica],” Jocelyn Lee, head of media strategy at advertising firm Heat, which also uses Facebook and Instagram as company platforms, said. “Not that [advertisers] aren’t concerned, but they always will go where the audience is. And we’re not seeing audiences leaving these platforms — both are still growing, especially globally. Basically, we’ll go wherever the fish are to fish.”

But it’s not just that the audience seems relatively unconcerned with Facebook’s privacy issues, although there is little question that user apathy is the saving grace for its platforms. Lee noted the extreme usefulness of Facebook and Instagram as advertising vehicles and the targeting tools they offer, and more recently as straight sales platforms, that make it painful for brands and advertisers to even think about leaving.

Lee mentioned Mansur Gavriel as an example. The popular women’s accessories brand recently held a sample sale in New York, but offered its Instagram followers early online access to a certain number of discounted items if they gave their e-mail. This is part of the still new “opt-in” wave of marketing on Facebook and Instagram and Lee said it works over time if there is a “value exchange” like exclusivity for personal information.

“[Mansur Gavriel] was able to capture the e-mails, add to a distribution list and know that this was an opt-in, that people were willing to give it,” Lee noted.

But some changes Facebook has made to its platforms in response to apparent privacy issues have advertisers at least taking a good look at what the social giant still has to offer them.

The company has reworked its News Feed algorithm to focus less on paid and brand content and more on posts from a user’s “friends” and made its privacy tools, which allow users to control the use of their data to a certain extent, more accessible. Another change was Facebook’s decision to end its “Partner Categories” program, which allows some third-party data companies access to user data, like purchasing activity on other sites after a Facebook/Instagram visit, for the purpose of ad-targeting. And the company has also been blocking some developers from running things like “quizzes” on Facebook, something Cambridge Analytica also did, if the results are gathered up and sold to marketers. Tribe Dynamics, a small firm that analyzes Facebook and Instagram data to calculate earned media value for a host of established beauty brands, said last month that its access to the platform’s application programming interface, better known as API, was cut off unexpectedly. A new system called Graph API is supposed to be on the way, but there’s no time frame for when developers and data companies will again have access.

“Protecting people’s information is paramount to our business,” a Facebook spokeswoman said. “We are working hard to rebuild trust with our global community, which includes actions to improve the controls people have on Facebook and transparency around the ads they see. We are thankful for the expressed support from many of our advertising partners around the steps we’re taking to better protect people’s information.”

Advertisers may have expressed support for Facebook making user privacy a bigger part of its platform, but it’s not surprising that at least some aren’t overjoyed with the changes.

“Wait-and-see is part of it,” Lee said. “Facebook came out with banning third-party sources and that got a lot of pushback and concerns. We’re not trying to sell data, we’re just trying to give a better customer experience with anonymized data. Six years ago, I would be getting ads that had nothing to do with me, like Russian brides or something. I don’t want that experience [again].”

Facebook also revealed a “clear history” option is coming for users to clear their browsing history on the platform, something they couldn’t do before, similar to the way one can clear browsing history from a search engine.

“It will be a simple control to clear your browsing history on Facebook — what you’ve clicked on, web sites you’ve visited, and so on,” founder Mark Zuckerberg wrote in a post, while not mentioning that these are key data points for ad-targeting. “Once we roll out this update, you’ll be able to see information about the apps and web sites you’ve interacted with, and you’ll be able to clear this information from your account. You’ll even be able to turn off having this information stored with your account.”

Zuckerberg added in the post that his experience last month testifying before Congress showed that he lacked “clear enough answers to some of the questions about data.” He added that Facebook will “have more to come soon” on its privacy controls.

While part of this is certainly due to the Cambridge Analytica scandal, Europe this month is implementing the General Data Protection Regulation, which places clear and heightened restrictions on how foreign tech giants like Facebook and Google can collect and use people’s data. So Facebook is actually being forced to realign parts of its data strategy. And Zuckerberg made sure to stop by the European Parliament on Tuesday to apologize for Facebook’s failure to “prevent these tools from being used for harm” — although he didn’t give many other detailed answers.

“We didn’t take a broad enough view of our responsibility,” he added. “That was a mistake, and I’m sorry for it.”

To be sure, all of this is being watched closely by advertisers. Megan Jones, senior director of strategy and service at boutique marketing firm January Digital, said “it’s still really early” but that there are still “a lot of questions.”

Jones admitted that part of the reason Facebook and Instagram have become such huge parts of advertising is that the platforms offered so many insights into users. “It was this really cool world with such a unique offering.”

But even with changes that may make ad-targeting more challenging, Jones said she has “a hard time believing we’re going to abandon Facebook — as consumers or marketers.” She also remarked how many people seem unaware that Facebook owns Instagram and operates the platform with the same privacy tools and back-end data capabilities.

Nevertheless, Jones said “we’re taking a look” at both platforms.

“We work with a lot of luxury and beauty brands and we have to be consumer-led, but these issues are becoming so ethical,” Jones added. “We’re going to have to be careful of where we represent ourselves.”

As for whether she’s been fielding more calls from competing ad platforms like Google, for instance, looking to move in on Facebook’s territory, Jones said that has always been “just constant.”

“We’re always looking at alternatives, but if the consumer behavior doesn’t change, it’s going to be pretty hard as an advertiser to pull our money and go somewhere,” Jones said.

And it’s not just advertisers who see no change in the number of people using Facebook and Instagram.

Recent research from Strategy Analytics showed that daily minutes of use and market penetration by Facebook “remained consistent before and after the [Cambridge Analytica] event.” Specifically, average daily minutes of use totaled roughly 54.6 minutes, while penetration hovered around 47 percent. Facebook also posted first-quarter gains in users, revenues and profits, the latter of which is almost entirely derived from advertising.

Prabhat Agarwal, a director at Strategy Analytics, has a simple, although partial, explanation for the unchanged usage: “There’s just a lack of competition in terms of social media outlets that have the presence globally.”

Another factor is that users, like the advertisers who want their data, see genuine “value” in what Facebook’s platforms have to offer.

“The core number of users is not going to change,” Agarwal said. “As long as the company makes these privacy adjustments, consumers will continue to find value in it as a platform. Frankly, the short-term spotlight has been reduced, not to say that users and Congress aren’t still paying attention.”

And that increased level of scrutiny could have Facebook on something of a ledge with users, advertisers and regulators, should another privacy issue crop up. But it will still take something relatively extreme to get Facebook’s core users to abandon it.

“Either a massive data breach or some sort or regulatory agency coming in and saying: ‘We’re going to monitor your data to make sure everything is peachy keen,’” could scare off users, and effectively advertisers, according to Agarwal.

Even if one, or both, of those things happened, however, there’s still the fact that Facebook and Instagram seem to have no genuine competition in social media, leaving them with something of a lock on their collective almost three billion active monthly users.

But Zuckerberg doesn’t agree with the idea that Facebook has become something akin to a monopoly in the digital age. He told Congress that “the average American uses about eight different apps to communicate and stay connected to people,” but didn’t name any in particular, or mention that at least three Facebook platforms are in that group. In addition to Facebook and Instagram, there’s also the messaging app WhatsApp, which has about one billion active users. So, altogether, Facebook has roughly 60 percent of the global population using one of its three platforms.

“There’s a lot of competition that we feel every day,” Zuckerberg told Congress. “That’s an important force that we definitely feel when running the company.”

For More, See:

Facebook, Instagram Privacy Changes Affect Beauty Brands

Going Beyond Sociability, Retailers Get Serious About Business With Instagram

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