Will the Cambridge Analytica scandal spell trouble for local advertising agencies?
Only time will tell as anxiety in the advertising industry swells after news broke that Facebook will no longer use third-party consumer data to aid its advertisers.
According to Recode, Facebook will remove ad-targeting options that rely on data from third parties such as Acxiom and Experian, which can collect offline purchasing habits.
The abrupt decision comes after allegations surfaced that Cambridge Analytica violated the 2016 U.S. election rules by using one of America’s most popular social media, Facebook.
According to The New York Times, Cambridge Analytica created a personality quiz app that accessed the personal information of 50 million Facebook users. As a result, the social media platform has come under intense scrutiny by its users and now is entangled in legal turmoil for mishandling its users' information.
Mark Zuckerberg, CEO of Facebook, has apologized and said, “This was a breach of trust.” He said he will testify before Congress, according to The Washington Post.
Nevertheless, the hashtag #deletefacebook has garnered some supporters.
“Whichever way this turns, from a legal perspective, this could change the social media landscape pretty drastically because … 97 or 98 percent of its revenues come from its advertising platform, and that advertising platform doesn’t exist if they don't have users,” said Brad Larabell, digital marketing strategist for RCP Marketing, which has offices in Grand Rapids and Muskegon. “If they see a drastic drop in its user base, then the value of that advertising platform diminishes a little bit — but that has yet to be seen.”
Similarly to Cambridge Analytica, advertising agencies target their audience on Facebook by their likes and dislikes.
Larabell said firms can specifically narrow down and target their audience according to users’ information that is compiled in a Facebook advertising portal called Facebook Business Manager and create an account to launch an advertising campaign on Facebook. The information is then freely available after they’ve bought advertising space on the social media site.
However, the Cambridge Analytica scandal breached Facebook rules. The New York Times reported Cambridge Analytica secured a $15-million investment from a Republican donor with the promise of tools that could identify the personality traits of American voters and influence their behavior. That strategy, however, turned out to be unsuccessful.
Cambridge Analytica then created a quiz app that illegally gathered data from 50 million Facebook users who took the quiz, as well as their friends, without permission. According to The New York Times, the breach allowed the company to exploit the private social media activity of a huge swath of the American electorate, developing techniques that underpinned its work on President Donald Trump’s campaign in 2016.
Facebook does not allow this information to be sold or transferred “to any ad network, data broker or other advertising or monetization-related service,” according to The New York Times.
Without data from third parties, Recode stated advertising agencies now can only target their audiences by the suggested preference of their own clients and by using authentic data Facebook generated from what users voluntarily agreed to (via terms and conditions) place on their pages, such as their birthdays, the TV shows they like, the movies they watch, the type of music they listen to, places they’ve been, where they work, where they grew up, etc., on the Facebook Business Manager portal.
Despite the international uproar that has cast a cloud of uncertainty over the advertising industry, many local advertising agencies said they will not delete their accounts just yet.
“Right now, Facebook is a good tool — a great advertising tool — so I don’t think anyone wants to lose that. But if they can’t keep their word, then people will not want to advertise with them and then they will not keep advertisers because A: they are losing their audience, or B: they are losing the trust of everyone,” said Bill McKendry, chief creative officer of HAVEN, which is located in Grand Haven.
Tim Haines, owner of Holland-based digital marketing firm Symposia Labs, said his firm uses Facebook advertising on a daily basis and is paying close attention to the situation.
As it all unfolds, Haines said he believes in the safeguards his firm has in place to protect his clients' information, two of which are virtual private networks and two-step authentication. VPN protects clients’ information when working in remote locations and two-step authentication requires more information before logging into an account.
“This case shows how powerful Facebook advertising can be, and I think sometimes it is more powerful than Facebook has realized if we are questioning whether Facebook advertising impacted an election,” Haines said.