Opinion

Facebook – a drug advertisers might be ready to go cold turkey on?

Although the social network’s advertising revenue has reached $11bn this quarter, Zuckerberg should not get too comfortable yet as the real fallout from Cambridge Analytica remains on the horizon, argues Eleanor Dickinson

The executives at Facebook must be feeling rather self-satisfied this week.

Despite recently experiencing perhaps the worst month in the company’s history when the Cambridge Analytica scandal exploded across the world and the firm became public enemy number one, the platform’s earnings released yesterday painted a very positive picture.

The social network’s revenue has climbed by 49 per cent to reach US$11.966 billion in the last quarter. Its advertising revenue has been strong too, rising by 50 per cent to US$11.795bn from the same quarter last year. Additionally, its daily active user numbers have remained at a consistent 1.45 billion, despite the high-profile #DeleteFacebook campaign.

It’s these numbers that have led industry commentators like Socialbakers chief executive officer Yuval Ben-Itzhak to conclude that, “Facebook is still the place to be for marketers and media publishers”. However, Mark Zuckerberg and his crew should not get too comfortable yet.

While it’s true that Facebook was fortunate to escape an en-masse boycott in the same way YouTube did last year – the odd brand aside – the Cambridge Analytica scandal goes deeper than just the platform’s own reputational damage.

Over the next six months, Facebook is preparing to shut down its Partner Categories, the third-party advertiser network that led to the data of 87 million people potentially ending up in the hands of Cambridge Analytica. Through partnerships with data companies like Experian and Acxiom, brands were able to specifically target customers based  on deep insights into their offline behaviour outside of Facebook. 

These deals have seen billions of marketing dollars pumped into highly-personalised advertising campaigns, and their loss will mark a huge blow for advertisers. To quote one Singapore-based agency boss, using Facebook in this way has become like a drug for marketers. And with crippling pressure from company boards to deliver guaranteed results, it has so far proved a habit hard to crack.

With Partner Categories gone, marketers now have the option of using its “Managed Custom Audiences” –  which will now only accept first-party data provided by the brand itself and third party feeds in limited circumstances. This leaves marketers with an unsavoury dilemma. Those who were unfazed by the users’ information being harvested may reconsider handing it over when it’s their own data at stake.

Meanwhile, the data-providers hit by the loss of Partner Categories are now under heavy pressure to divert their clients’ dollars to alternative publishers or lose them altogether. And according to industry insiders, conversations between major media owners and these soon-to-be former Facebook partners are already well underway.

Although these ramifications are unlikely to lead to an all-out blacklist of Facebook –  its 1.45 billion daily active users are still a tantalising selling point– I believe the marketing community will be faced with self-reflection. Procter & Gamble’s chief marketing officer Marc Pritchard – the controller of one of the world’s largest advertising budgets has already made a significant overhaul to the company’s digital marketing investments.

Two years ago, he made the decision to move away from precise hyper-targeting in favour of mass reach and has now revealed his plans to reinvest US$200 million, cut from digital ads, in television, radio and e-commerce.

Although for now only a few brands such as Heineken have publicly followed his lead by re-evaluating a hyper-targeted approach, the loss of the Partner Categories will give marketers more impetus to re-evaluate their strategy. While this will not necessarily divert resources away from Facebook, it is true that targeting precise groups of consumers does cost more per impression, and that will no doubt hit the platform’s coffers.

In addition, it’s worth considering that the  Cambridge Analytica scandal was just one in slew of controversies concerning digital marketing over the past two years: brand safety, transparency and fraud remain ever-present topics of conversation both at conferences and on the pages of Mumbrella.

As a result, both Pritchard and Unilever’s Keith Weed have had less than kind words for the digital advertising ecosystem. The latter recently issued a chilling warning to all the platforms, including Google and Snapchat, to “clean up the online swamp”. As the Cambridge Analytica scandal proved, that swamp is still stagnant. And now with the enforcement deadline for the General Data Protection Regulation looming on May 25, brands will no longer have the option to dismiss data privacy and its use in ad-targeting as they may have before.

No doubt champagne bottles were clinking at Facebook HQ in San Francisco yesterday. However, the hangover from this may prove painful for its own sales and marketing team. The platform faces some significant challenges over the next few months to reassure its advertisers that it is worthwhile to stay by their side and keep the faith.

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