At the end of last year, Facebook had more than two billion active monthly users worldwide. Considering the global population comes in at a shade under eight billion, this is not an insignificant number. People have come to rely on the social network site to share photos and stories with friends and family. Some even forego surfing the web and use Facebook as their primary means of staying up to date with news and current affairs. It is because of this that the recent data breach, that is affecting more than 87 million users is having a significant ripple effect on the platform and the businesses who have come to rely on it for marketing.
In March 2018, news broke that Cambridge Analytica, a data analytics firm working with Donald Trump’s election team and the Brexit campaign, harvested millions of US voter profiles on Facebook. This information was used to build a sophisticated algorithm that could predict and influence choices during the American presidential election. Such has been the extent of this, that it is now estimated that almost 60 000 South Africans have also been compromised.
Before we look at the impact this could have, it is important to understand the process of what happened. Several years ago, Cambridge Analytica received user data from a Facebook quiz app that purported to encompass psychological research. The scary thing is that we can all probably admit to completing one of these quizes before. Think along the lines of ‘which Game of Thrones character are you?’ or ‘we can predict your age based on what you like to eat’.
For the specific quiz in question, approximately 270 000 users and their network of friends inadvertently shared their personal details with the company, (who reads the fine print before giving an app permission to using your Facebook data?). That information was passed on to Cambridge Analytica by the developers of the app and the rest, as they say, is history.
But what is the big deal? We know that the likes of Google, Facebook, Amazon, Netflix, and others use our personal information to provide us with a more customised experience. We give up some degree of privacy to get access to recommendations tailored to our likes and dislikes across most spheres of our lives.
However, Cambridge Analytica allegedly used the data (and the fact that it was given to them breaks Facebook’s terms and conditions) to “build tools that could identify the personalities of American voters and influence their behaviour.” What makes this potentially more nefarious is that Facebook ostensibly knew what was going on, given the amount of data being pulled from the site, but did nothing to stop it as it was initially used for academic research purposes.
Trust, and the abuse of it (whether real or perceived), is the cornerstone of social networking today. In fact, research shows that 78 percent of consumers trust each other more than they trust advertising. This is partly the reason for the success of social networks like Facebook. We are connected to people we know and rely on them for recommendations more than we do organisations who have an agenda to sell products and services. People are also quick to use Facebook and other platforms to complain about poor customer service. The same research shows that 81 percent of respondents believed that blogs, online rating systems and discussion forums can give consumers a greater voice in customer service, but less than 33 percent believed that businesses take customers’ opinions seriously.
Lose the trust placed in a social network and there will be concerns of ever being able to win it back. After news broke of the Cambridge breach, Facebook lost approximately $45 billion in value of its share price. Some analysts are using this as an opportunity to invest in the company, as the expectations are that opportunities like this do not come around often.
Prior to the breach, Facebook posted revenues of more than $10 billion in November 2017, a year-on-year increase of 47 percent. According to the company, it had over six million active advertisers on the platform, when details of the breach were made public. Mobile ads contributed 88 percent of revenues due to an increase in their frequency and the price per ad.
Globally, companies have grown to rely on Facebook as a cost-effective way of reaching highly segmented audiences. Even in South Africa, brands have embraced the platform with a variety of campaigns that can be measured more reliably than the more traditional ones on television and radio. This targeted approach is now under scrutiny given what happened with Cambridge Analytica. The Federal Trade Commission has already launched an investigation into the data practices of Facebook with the company facing significant fines if found guilty. There is also an increasing expectation that restrictions will be placed on the types of ads Facebook can accept and how they target users.
Millions of Facebook users are now more conscious of the kind of information they share on the network, and (hopefully) a bit more hesitant to clicking on those quizzes. As a result, advertisers and marketers need to start thinking differently on how to leverage the platform.
Facebook has by no means become a dead channel but their approach to data gathering and how they choose to use this information to create the next big campaign, really has to change