Facebook in the age of revolt

Perhaps the most unlikely revolt in the media industry is the case of marketing chiefs rising up against Facebook. It’s one that caught me by surprise, and I’ve been trying to understand what is behind it. 

And again I’ve come back to trust. Facebook is reaping what it has sown for many years. It lost the trust of publishers long ago. Yes, publishers should have known better, but they got seduced by dodgy metrics and false promises and bet a big chunk of their businesses on the dream that Facebook would turbocharge audience growth — and eventually lead to similar gains in ad revenue. David Carr in 2014 memorably summed up Facebook as the giant dog galloping at you, leaving you uncertain “whether he wants to play with you or eat you.” It’s safe to say publishers discovered it was the latter.

And now it’s the turn of marketers. On the surface, you’d think there is little daylight between Facebook and its “partners.” Facebook, like Google before it, has done its fair share of wining and dining of marketers. Facebook’s ad revenues have skyrocketed. But along the way, Facebook has ruffled many feathers with heavy-handed tactics. Some marketers have felt bullied by the giant platform, with top Facebook executives going over their heads to company leadership with the basic message that the marketers aren’t doing their job right because they’re not spending enough on Facebook.

Now, the C-suite is alert to the risks of associating with Facebook. The calculus has moved from “efficiency” to reputational risk, a far greater concern for a CEO than getting a lower eCPM. The pullback of big brand dollars, while unlikely to have a big impact on Facebook’s bottom line, will dent its reputation, a top marketer told me. “That is more important to [Facebook] than the dollars.”

Technology companies have a history of getting over their skis with advertisers. It’s hard to imagine now, but AOL used to throw its weight around so much that it was notorious in marketing circles. The precipitous decline of AOL’s ad business was accelerated by this bad blood. The tendency of giant incumbents is to overplay their hand.

Facebook is no different. Mark Zuckerberg has long outsourced relations with the ad industry to Sheryl Sandberg. There is the unspoken but clear message that he finds that part of the business — basically the entire business — distasteful. Right or wrong, marketing executives can see this as arrogance. And that was the reaction of many when he used a Facebook company meeting to call the bluff of advertisers. He said they’d come back and the boycott would not hurt the company. When he met with leaders of the boycott, he stuck to familiar talking points. That also did not go over well, made even worse by the release of a report Facebook itself commissioned that slammed the company for its fecklessness in rooting out misinformation and hate. Poor Nick Clegg, a politician by training, was subjected to an epic “ratioing” when he averred Facebook does not profit from hate.

This is a curious strategic move. He has, in effect, boxed marketers in by making a resolution to the discord impossible without humiliating marketers. That’s never a great idea.

“That was a red flag to the bull,” said a top marketer. “I don’t know how his calculus allowed him to say that. That makes it harder to come back to the platform.”

The longer the boycott goes on, the added risk to Facebook because more data will be collected on the true efficacy of ads on the platform, which many marketers believe to be inflated. Let’s face it, Facebook hasn’t exactly been airtight with its analytics. While the risk of losing these large marketers is manageable, the industry veteran pointed to a potential snowballing if the pressure to boycott Facebook spreads to large gaming companies that pour money into Facebook for app downloads. “It will spread past the brands to those folks,” the insider predicted.

For advertisers, the big question is what victory looks like. There will be the temptation to act the part of Neville Chamberlain, the marketing executive said, declaring “peace in our time.”

“I don’t think many marketers thought through when they joined the boycott what success looks like,” the executive said. “Some marketers have businesses that are entirely dependent on Facebook.”

Maybe it’s time for them to break the circle of misplaced trust.