2018 was a rough year for Facebook on multiple fronts. This article, “Facebook Ad-Spend Growth From National Marketers Is Slowing, Intelligence Firm’s Data Shows” talks about one of those fronts. According to the article, the rate of ad-revenue growth for Facebook is slowing and those dollars are shifting to new players/platforms. The article quotes James Fennessy, CEO of Standard Media Index (an advertising intelligence service) as saying “Facebook’s growth from national marketers is slowing, indicating that major brands are concerned with recent events there and are focusing on brand-safe environments.” Still, the news isn’t entirely grim. Facebook’s ad growth is still positive, and in double-digits so don’t feel too bad for them yet…
Facebook has been plagued by negative publicity for the past couple of years but according to this article from AdAge, they don’t appear to be losing any advertising dollars. From all appearances, Facebook seems immune to issues resulting from high-profile hacks, Russian political interference, privacy issues, negative press, and more. Perhaps Facebook’s plethora of problems stems from their long-time motto: Move Fast, Break Things.
The lack of impact in advertising dollars to Facebook seems to fly in the face of a consumer society (primarily millennials) who value transparency and social responsibility. According to the AdAge article, many industry executives are urging caution and suggesting the tide might turn against Facebook if they can’t get a handle on their business.
I find the situation interesting, especially considering the fact that Facebook is now considered “old person social media” (at least according to my students). Perhaps the millennial desire for social responsibility won’t have an impact if advertisers aren’t focusing on that demographic.
As a side note, the article also talks about efforts made by a firm with ties to the Republican party that have tried to push lawmakers off of Facebook and onto Google and Apple. This can provide a good example for students of how the political/legal environment can potentially influence the business environment.
It was recently discovered that back in 2015 Facebook allowed 3rd party Cambridge Analytica to access private data from over 50 million Facebook users without consent from those users. Cambridge Analytica used that data to build psychographic profiles and use those profiles for targeted political campaigns. Facebook actually discovered the issue in 2015 and told the offending parties they needed to certify that they deleted the data but they didn’t verify that deletion and they never notified users. Now it looks like that data was not deleted and has continued to be used for political purposes by Cambridge Analytica. You can read more about the incident in this article.
Facebook has received a fair amount of negative publicity recently that continues to erode their brand and the trust their customers have in them. Ask your students how Facebook should respond. Ask if they think the negative publicity will actually have a material impact on the number of facebook users or ad sponsors. If students say it won’t have a material impact, ask whether Facebook should do anything about it or not if that’s the case. This can lead to a rich discussion that covers business ethics, opportunities for competitors to differentiate, opportunities for startups, and more. What role should the government play, if any, when it comes to regulating use of consumer information for marketing or other purposes?
Facebook started as a platform for college students and quickly became popular with teenagers as well. As the platform went through the adoption curve it started to pick up older users. As the Facebook demographic shifted, so too did it’s appeal to the younger audience that helped establish its dominance. This USA Today article, “Facebook losing young users even faster to Snapchat, eMarketer says“, talks about some of the challenges currently facing Facebook and how Snapchat is now growing its user base faster than Facebook. Better privacy control, faster viewing, and limited permanence are some of the factors that are driving 12-17 teenagers toward Snapchat and away from Facebook. 6 years ago Facebook recognized the threat and acquired Instagram as a means of continued access to teenagers but Snapchat is now getting new users even faster than Instagram.
The consequences of this change can be significant for Facebook. Their business model relies on advertising and if they can capture users early in life it is much easier (and cheaper) to retain those users rather than trying to switch users off of competing platforms. Should Facebook modify their platform to cater to younger viewers? What would they have to do? Could they be successful with a redesign or is their present brand identity too strong for younger viewers to consider using them? Can they succeed if they stay focused on an older demographic?
The measure of your impact in social media is often the number of followers or views that you have. The theory being that better, more interesting, or more popular individuals and content will naturally draw a larger follower base than those of lesser interest. However, it seems that everywhere you turn there are individuals willing to venture into ethical grey areas to get ahead. The New York Times wrote this lengthy but fascinating article titled The Follower Factory.
The article covers a number of topics including social identity theft and the practice of buying Likes, followers, YouTube views, and more. The article states that nearly 15% of Twitter’s reported active users are actually automated accounts designed to simulate real people. Facebook disclosed that they have up to 60 million automated accounts. The range of people buying these fake accounts is staggering. Professional athletes, politicians, entertainers, TED speakers, and church pastors are just a small sampling of the customers knowingly buying fake followers to boost their social media status. These accounts are also used to support overseas governments, promote products and services, and promote pornography. Some of these accounts are auto-generated but many of them are duplicates of actual people making it look like those individuals are the ones promoting those views, products, or services.
The article also discusses the incentives many companies put in place that unintentionally encourage people to participate in this activity. Overall it is a very interesting article and could lead to a rich class discussion.