Facebook: the changing fortunes of a tech titan

It is not so long ago that Facebook’s halo shone brightly. It was apparently created with the most laudable principles in mind: to connect people and to create communities around issues that people care about. For advertisers, it provided the holy grail of being able to create highly targeted ads and deliver them to the right user at the right time.

But then it all went wrong. The company has been buffeted by a series of major privacy and security scandals on a seemingly almost monthly basis. Its reputation has plummeted in inverse proportion to the number of negative headlines it has received. Is this the beginning of the end for Facebook? And is it still a brand safe platform for advertisers?

What’s gone wrong for Facebook?

What hasn’t? The real troubles started in 2016, when Facebook faced accusations that it had allowed external forces to interfere in the UK’s Brexit referendum and the US presidential election, as well as allowing the spread of misinformation. Then, of course, came the Cambridge Analytica scandal where a whistle blower claimed that the data analytics firm working with Donald Trump’s election campaign had been given access to the personal information of up to 50 million individuals in order to target them with personalised political ads.

That saw the opening of the floodgates: in the last 18 months there have been multiple scandals, including claims of sensitive data being given or offered to third parties such as Spotify, Netflix and a Russian email service linked to a close associate of Vladimir Putin; the spreading of fake news; the enabling gender and racial discrimination in job and housing ads; the hacking of 30 million accounts; the inflation of video view metrics; and a smear campaign to silence or discredit prominent Facebook critics. Most recently it emerged that Facebook is still leaking data to third parties, and last week it was in trouble for refusing to follow rival Twitter’s lead and limit or ban political ads.

A sharp decline in corporate reputation

This scandals and controversies have had severe reputational ramifications for Facebook. It now has an exceptionally low reputational score in the Reputation Institute’s US RepTrak ranking, below even a cigarette company. This, according to the Reputation Institute, is because of Facebook’s response to these crises, rather than just the crises themselves: Mark Zuckerberg and his leadership team have always focused on trying to protect their image, rather than their reputation.

Is Facebook still a good option for advertisers?

Of course, many of these issues are rooted in the fact that Facebook makes the lion’s share of its revenue from its advertising business: last year, 98% of their global revenue was generated from advertising. User data is at the heart of the product it offers advertisers. But will their problems have any impact on marketers? There are queries around a decrease in the number of active users, as well as in the quality, effectiveness and reliability of consumer data – and, of course, whether continuing to use Facebook’s advertising products insinuates that you are ok with their behaviour. However, it would be safe to assume that the many people who still use Facebook – and their number is in fact increasing – aren’t unduly bothered by the scandals that the platform has faced. Furthermore, while Facebook is taking steps to improve privacy and security, they will always ensure that their product offering – their core income – stays useful and relevant to advertisers. Marketers should focus on ensuring that their advertising stays relevant, diverse and emphasises the brand’s commitment to data security and privacy. It is also worth thinking deeply about what targeted advertising contributes to your marketing strategy: are you actually accessing new customers, or just those who would already buy your products?

Thanks to Facebook’s reliance on advertising revenue, advertisers are in a position of great power. They could use this to great effect: by teaming up with agencies and advertising bodies they could make it clear to advertising platforms such as Facebook exactly what they expect in terms of privacy and data usage. In the face of such a unity of strength, could they refuse to comply?

How can Facebook win back the trust of its advertisers and users?

As for Facebook themselves, they must continue to focus on the issues of trust that currently surround its brand: it must be honest and transparent with both users and advertisers, and identify effective ways to eliminate the preponderance of fake news that still litters its platform.

Facebook has undeniably played a key role in the targeted advertising revolution, but to maintain its status it has a lot of soul-searching to do.

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