What is the fallout from Facebook’s Cambridge Analytica PR disaster?

Facebook CEO Mark Zuckerberg was forced to make a statement

What are the long-term implications of Facebook’s travails amid the Cambridge Analytica furore, and just what is the likelihood of brands and the 2 billion users Facebook serves losing interest?

After what has arguably been the most torrid week in Facebook’s 14-year history, question marks are now surrounding its complicity in the Cambridge Analytica scandal, with advertisers joining lawmakers and privacy experts in using the furore as a rod to beat the social network’s back.

Facebook chief executive Mark Zuckerberg broke his silence five days into the controversy surrounding the data breach, where he revealed additional measures had been put in place to add to the tech giant's earlier curbs on how third parties access users' personal data.

“While this specific issue involving Cambridge Analytica should no longer happen with new apps today, that doesn't change what happened in the past,” he wrote in a blog post.

“We will learn from this experience to secure our platform further and make our community safer for everyone going forward.”

This statement topped a week when it was reported by several media outfits that self-styled "behavioral change" company Cambridge Analytica, exploited earlier Facebook data vulnerabilities – which have since been plugged – and then used the information to influence the 2016 US Presidential election on behalf of the Donald Trump campaign.

In the days since the story hit national headlines, Cambridge Analytica has been suspended from the social network, while Facebook's own stock took a tumble; with the incident wiping more than $50bn off the company's value in a single day.

Adding fuel to the fire leading politicians have also called on the Facebook founder to answer questions on its data protection policies with the likelihood of Zuckerberg answering questions in front of US and UK lawmakers a likely occurrence in the near future.

The rising tide of #DeleteFacebook

Public opinion too looks to have turned against the social network. Negative sentiment was underlined by WhatsApp co-founder Brian Acton, who having sold his company to Facebook for $19bn in 2014, added his voice to the #DeleteFacebook campaign that has been gaining momentum online.

A measure ranking the negative sentiment came from Hitwise, which relesed data showing that the number of searches on variations of the term “delete Facebook” had increased by 423% in the days after the scandal emerged.

All of this emerged as Advertising Week Europe was poised to kick off. The timing of Facebook's own scandal echoed that of the brand safety crisis that engulfed Facebook’s ‘duopoly bedmate’ Google after an exposé by The Times brought the issue of ad misplacement to the attention of consumers.

As the curtain falls on the latest edition of Advertising Week, advertisers too are adding their voices to the debate, with The Incorporated Society of British Advertisers (Isba) – the self-proclaimed ‘voice of British advertisers’ – describing the matter as “deeply disturbing” in a statement.

Advertiser saber-rattling

In subsequent interviews with mainstream media conducted after the Zuckerberg statement, Phil Smith, director general of ISBA, took a much harder line.

"What we are hearing at Isba is that advertisers are concerned. When we meet with Facebook tomorrow we want to understand the scope of the inquiry Mark Zuckerberg announced yesterday,” he told the Times of London.

"We want reassurances for our members that it will get to the bottom of the issues and any implications for the public and for advertisers."

As industry trade bodies wade into the matter, digital marketers are now facing internal pressure to answer questions from the top.

Despite multiple controversies, surrounding the value of media spend on Facebook and Google, the duopoly has retained as tight a grip as ever on advertiser budgets, However, the duo's combined market share is slipping and, for Facebook at least, the Cambridge Analytica expose is spurring brand bosses to more closely examine how they engage with the platform.

Speaking on condition of anonymity on the sidelines of Advertising Week Europe, one senior digital-focused brand-side marketer detailed to The Drum the angst felt among advertisers, giving an insight into the kind of questions digital teams were now having to answer.

The source spoke of having to answer “tough” internal questions about the scandal, adding that company leadership was wary of any negative associations.

“Marketers have spent years begging Facebook to give them user data for their own purposes, and moaned about not being able to get access to it,” the source said.

The source went on to say that because the Cambridge Analytica scandal “doesn’t strictly affect the advertising product” as much as YouTube’s brand safety issues might have, adding that things are “much less black and white.”

However, C-suite executives are now having a lot a high brow conversation around the ethics and morals of this “murky ground” according to the source.

“There is a legitimate concern that [advertising on] Facebook [could carry] a potential future data protection/GDPR risk etc but everything I’ve seen suggests Facebook actually has fairly tight policies on that and this [has exploited] an old loophole,” they added.

US advertisers mull their stance

The Drum contacted Isba’s US counterpart the Association of National Advertisers (ANA) for comment, and while a spokesperson declined to comment, it is understood the matter is being debated internally.

Meanwhile, Mozilla, the not-for-profit internet organization behind the Firefox web browser, hasn't hesitated in its decision to “press pause on Facebook advertising.”

In a blog post describing the move, Mozilla’s Denelle Dixon spoke of how it hoped the social network would improve its privacy settings. The brand said it was encouraged by Zuckerberg’s latest statement, but that for now it would not continue to spend there.

“This news caused us to take a closer look at Facebook’s current default privacy settings given that we support the platform with our advertising dollars,” read the post.

“While we believe there is still more to learn, we found that its current default settings leave access open to a lot of data – particularly with respect to settings for third-party apps.

Increased diligence about Facebook data is now a near certainty

In an emailed statement to The Drum, influential analyst Brian Wieser from Pivotal Research expressed his belief that an advertiser exodus from Facebook was unlikely, but that the businesses' woes on the privacy front weren't over quite yet.

“I do think this will cause more scrutiny on many fronts – advertisers who have bought Facebook – because Facebook data says it works – [will now be] asking whether it’s true,” he wrote.

This could lead to advertisers looking to reduce their reliance on Facebook’s Custom Audiences data segments because of enhanced fear of aggressive enforcement – a likelihood as indicated by the upcoming General Data Protection Regulations (GDPR) – which could have the effect of causing revenue growth to decelerate (at least in Europe), according to Wieser.

This is a sentiment backed by Isba’s statement issued this week, it read: “Isba welcomes the forthcoming introduction of GDPR, which strengthens the law on data protection and privacy for all individuals in the European Union.”

Wayne Blodwell, chief executive of The Programmatic Advisory, a consultancy that advises brands on third-party partnerships, echoed this sentiment.

“GDPR has upped the game for brands and agencies to some extent, there’s definitely lots to do,” he said, adding that one certainty is that brands will undoubtedly be more diligent when it comes to such partnerships in the wake of this scandal.

Facebook is certainly going to have to work harder than it has ever done before to regain the trust of its user base, but few would count it out from succeeding long-term.

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