Facebook Apocalypse? What to Monitor | Street Fight

Facebook Apocalypse? What to Monitor

Facebook Apocalypse? What to Monitor

It’s tough being a Facebook apologist this month. The Cambridge Analytica scandal has hammered Facebook’s stock, and CEO Mark Zuckerberg is scheduled to be grilled by Congress today and tomorrow. The social network plays a critical role in local marketing for both multi-location brands and smaller local merchants, and many agencies and local marketing providers are dependent on its platform. We’ll suggest four key indicators onlookers can monitor to gauge whether Facebook’s market influence will decline.

Despite its lackluster efforts in local search and content, Facebook has established itself as one of the most widely used and effective local marketing platforms, both as an advertising vehicle and customer review source. Its messaging and commerce contributions are nascent. Social media in general, and paid Facebook ads in particular, are top targets for local spending growth. Over 60% of multi-location brands Street Fight surveyed use Facebook for local marketing, a figure that was just a shade higher than Google’s.

Already under fire for distributing fake news, redlined ads, and Russian political meddling, Facebook admitted that as many as 87 million users might have had information collected in 2014-15 by the network of sketchy players surrounding Cambridge Analytica, which used it for psychographic profiling and targeting during the 2016 American election.

Regardless of whether that tactic actually works in politics—and Cambridge has made some very dubious claims—it’s fairly common in brand marketing. What’s more, this wasn’t a security breach where private information like credit cards, passwords, and social security numbers were stolen. Rather, what’s shocking is how easy it was for Cambridge Analytica and others to exploit the friends-of-friends data sharing by apps that, at the time, were operating just the way Facebook meant them to. As it turns out, Facebook had already tightened those procedures even before the election, but the damage had already been done.

Facebook admits it doesn’t know how many users were affected; the 87 million figure is supposedly the maximum number that the particular app could reach via data-sharing APIs. But in response to the developing story, Facebook is offering the following responses, several of which have potentially severe implications for marketers:

  • User controls. Facebook is rolling out a simpler and more prominent set of tools so that individual users will have a better idea of what data the company has and how they can better control its availability to apps and marketers. The company would have done some of this anyway to comply with the EU’s General Data Protection Regulation, which goes into effect at the end of May. Yet Americans are notoriously lazy about reading terms of service and configuring customization features, and aside from a vocal minority, we are largely unconcerned about privacy, especially when it comes to trading advertising for free content and services.
  • App disconnecting. Facebook is coming down hard on data sharing among apps, cutting off several APIs, restricting what apps using its Login can do, and enabling users to delete apps in bulk. Apps that enable Pages users to easily check on posts and respond to reviews, etc., will now have to be approved by Facebook. This will require extra time and effort for agencies and marketing services providers and could limit overall app utility.
  • Restricting third-party data integration. Facebook is essentially leaving the GDPR-mandated responsibility of getting user permission for data use to brands and and other data collectors. More importantly, it will limit these actors’ ability to layer their audience information atop Facebook data for targeting Facebook ads or ads in the extended Facebook network. It shut down its Partner Categories program, abandoning data aggregators such as Acxiom and Epsilon. 
  • Political advertising transparency. Facebook claims it will do a better job identifying political ads, who’s paying for them, where they run, and keeping an archive of that information for journalists and researchers. 

What to Watch, and When

So, with all this in the air, will Facebook’s usefulness as a local marketing platform be seriously weakened? Are the company’s responses so draconian as to render its platform worthless for advertising? Street Fight recommends monitoring the following to evaluate how serious the damage is.

Usage. Facebook’s daily active users in the U.S. and Canada declined for the first time ever last quarter, from 185 million down to 184 million. That’s less than 1%. (Overall time spent was down also, but Facebook said that drop can be attributed to an intentional reconfiguration of the News Feed algorithm.) Facebook reports these figures on its Q1 earnings call scheduled for April 25. Much of the news happened too late in the quarter to have much effect, but if daily active users are down 1% to 2%, that will be a damning indicator. And if that continues or worsens in Q2, all bets are off. 

Government regulation. Most Washington watchers expect nothing from this Congress. Going into an election year, pundits don’t expect legislation to regulate Internet political ads like traditional media, and those regulations are soft already. Existing rules are only federal, and it’s actually hard to determine what is and isn’t a “political” ad. What Facebook says it’s doing might be stricter already.

Third-party data integration. Acxiom’s stock got crushed and its CEO was left grasping for thin support. Facebook’s restrictions are evolving, but at the very least, it’s going to require more work by marketing tech and services companies to do the kind of lookalike targeting and attribution tactics they’ve been developing across media and digital platforms. Brands should watch what leading digital agencies do as workarounds and evaluate whether the walls on the garden are too high to climb.

Advertiser abandonment. One study says only seven of Facebook’s top 1,000 advertisers have cut it off since the scandal broke. Watch that trend for reactions to potential usage decline and targeting ineffectiveness. And—speaking practically if not cynically—with fewer advertisers, Facebook inventory could be cheaper and less cluttered.

David Card is Street Fight’s director of research.

Click here for more on the The Local Merchant Report 2017, and here for Enterprise Local Marketers 2017.

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