What’s Next for Advertisers on Twitter with Elon Musk as an Owner?

What’s Next for Advertisers on Twitter with Elon Musk as an Owner?

Twitter

Will advertisers leave Twitter under Elon Musk’s ownership? That question is getting bandied about a lot these days. That’s because of widespread speculation that Musk will relax Twitter’s content moderation policies. This, in turn, could conceivably create brand safety issues by making controversial content more prevalent on the app, which has nearly 400 million monthly active users. For example, Advertising Age reported that “Marketers are worried that Musk will reopen the floodgates on uncivil behavior on the platform.” Ad agencies consulted by Ad Age said that their clients are increasingly asking about the risks of staying on Twitter. Here’s what I think will happen:

  • Some advertisers will flee Twitter and never return.
  • Some advertisers will put Twitter advertising on pause but eventually return to Twitter.
  • Most advertisers will do nothing.

The fact of the matter is this: advertisers have shown by their actions that they have a higher tolerance for social media controversy than news media reports might have you believe. We have seen time and again controversies erupt on platforms such as Facebook, Instagram, Twitter, and YouTube. Most recently, Facebook became the target of widespread public scorn after whistle blower Frances Haugen, an ex-Facebook employee, shared internal documents that showed Facebook executives knowingly allowed its algorithm to publish harmful and divisive content on users’ news feeds.

The resulting expose, published in The Wall Street Journal, also sparked speculation that advertisers would leave Facebook. Some did. But most did not. Why? Because the fact that a publisher and aggregator of news content (which is what Facebook does) knowingly shares divisive information was not exactly shocking news to advertisers. Mainstream news media have been attracting audiences by publishing divisive content for decades, long before the internet existed. And they’re doing so today. As a result, advertisers have a higher tolerance for conflict than Facebook’s critics did.

What really hurt Facebook was Apple. Facebook’s parent, Meta, disclosed recently that the company would suffer a $10 billion revenue hit in 2022 because of the impact of Apple’s iPhone privacy controls launched in 2021. Meta’s stock tanked dramatically so as a result. Why? Because privacy controls would likely make ad targeting more difficult on Facebook. It was ad targeting, not a Wall Street Journal expose about the company’s culture, governance, and content policies, that hurt Facebook.

The real concern among advertisers is not whether controversial content will appear on Twitter. The fact is that controversial content already does appear on Twitter. Advertisers are more concerned that their ads could appear alongside controversial content. This is more of an issue with how an app manages its algorithm. YouTube, for instance, landed in hot water recently because advertisers’ content was appearing alongside hate speech, but most advertisers understood then (and understand now) that it’s impossible to stamp out hate speech completely. Many more also understand that controversial content is not necessarily hate speech. These realities are part of being a brand on social media – and they always have been.

Twitter has been down this road before, too, such as when a major hack involving a crypto currency scam embarrassed the platform and cast a spotlight on how easy it is for bad actors to exploit Twitter to commit crimes. Or when the proliferation of trolls and bots threatened Twitter’s reputation. Advertisers were concerned, to be sure, but for the most part they reacted by pressuring Twitter to improve its algorithm as opposed to demanding wide-scale changes in how Twitter operates fundamentally.

My advice to advertisers is:

  • Keep advertising on Twitter if you are satisfied with your results so far.
  • Monitor brand safety closely, but that’s true whether you are advertising on Twitter or any other social media app.
  • Watch where your audience goes. There is a very real possibility that ongoing controversy at Twitter could cause a drop in users. The question is whether your audience will leave Twitter. It’s a question. It’s not a certainty. Work with your agency partner to keep tabs on the situation, but don’t make assumptions based on news headlines.

True Interactive monitors developments on social media all the time as part of being a well-informed partner to our clients. Keep watching this blog for updates.

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Twitter image by Alexander Shatov on Unsplash

Elon Musk image by https://pixabay.com/illustrations/elon-musk-space-elon-spacex-tesla-6222396/

 

What Does Meta’s Big Move with Horizon Worlds Mean to Brands?

What Does Meta’s Big Move with Horizon Worlds Mean to Brands?

Meta

Meta, the parent company of Facebook and Instagram, has announced that the company will help individual creators generate income in Meta’s Horizon Worlds platform. This is a significant sign that the so-called metaverse will open up ways for people to monetize the metaverse as it takes shape.

What Is the Metaverse?

The metaverse is a shared virtual world where people can work, play, and live through digital twins, or avatars. Aspects of the metaverse are here already: every time we use a digital currency, every time we hang out on Fortnite or Roblox (gaming is currently a big slice of the metaverse), we’re engaging with parts of the metaverse. They’re just not connected seamlessly yet.

Businesses such as Meta aren’t waiting for all the details to get sorted, though: they are staking a claim to this nascent world by building their own virtual worlds.

What Is Horizon Worlds?

So, what exactly is Meta trotting out? Horizon Worlds (formerly Facebook Horizon) is a free virtual reality, online video game that allows people to build and explore virtual worlds on the metaverse. In short, Horizon Worlds is one potential access point into the metaverse via a gaming platform.

Meta first published the game on its virtual reality Oculus VR headsets in the United States and Canada on December 9, 2021. This approach meant that the audience for Horizon World was necessarily limited to people who could afford a virtual reality headset (specifically, Oculus VR). But Meta is now making Horizon Worlds available even if users do not have virtual reality headsets.

What Did Meta Announce about Horizon Worlds?

Mark Zuckerberg said Meta is testing new tools that allow creators to expand their reach—and create some lucrative opportunities—within the worlds they build on Horizon Worlds. In a video, he said, “The ability to sell virtual items and access to things inside the worlds is a new part of [the] e-commerce equation overall. We’re starting rolling this out with just a handful of creators and we’ll see how it goes but I imagine that over time we’ll get to roll it out more and more.”

If there’s anything Meta wants you to take away from this development, that would be:

  • Meta is testing a way for creators to sell virtual items and experiences within their worlds.
  • Meta is also testing a Horizon Worlds Creator Bonus program.

While Meta is currently working with a handful of creators to get feedback on this initiative, the long-term plan is to create an environment in which creators can earn a living in a world of digital goods, services, and experiences. The overall vision is that the metaverse will crack possibilities for entrepreneurs—wide open. And it’s not a matter of creators being thrown into this world without a safety net or guide: a $10 million Horizon Creators Fund, announced last October, is meant to provide resources to Horizon Worlds creators.

The opportunities are certainly compelling: Meta is rolling out a test with a few creators that facilitates the selling of virtual items within their worlds. This might manifest as attachable accessories entrepreneurs create for a fashion world, say, or paid access to a new part of a creator’s world.

Meanwhile, the Horizon Worlds Creator Bonus program, meant for participants in the United States, offers bonuses in the form of goal-oriented monthly programs that reward creators with a pay-out at month’s end. The bonuses honor progress made towards the creator’s goals, and are not subject to fees (read: creators will be paid in full). While rewards may evolve, creators are currently rewarded (in the limited test) for building worlds that attract the “most time spent.”

What Does All This Mean?

This is how we read this news:

  • Horizon Worlds is yet another sign that the metaverse is getting bigger with extraordinary speed. For confirmation, one need look no further than JP Morgan, which says the metaverse is a “trillion dollar industry” in which it acknowledges “explosive interest.” They aren’t just talking the talk: the investment bank has opened a lounge in the blockchain-based virtual world Decentraland. The Onyx lounge, named for JP Morgan’s Onyx blockchain unit, includes a roaming tiger that greets visitors and a portrait of CEO Jamie Dimon, not to mention a suite of Ethereum-based services. JP Morgan’s claim to fame? That it is the first major lender to enter the metaverse.
  • It’s also an example of how businesses are empowering the so-called creator economy, a class of businesses comprising millions of independent content creators and influencers. We’re hearing about creators more partly because apps like TikTok have granted them more power and more influence.

But the creator economy stands to become even more powerful. That’s because collaboration networks are proliferating, networks that give creators an all-in-one platform to create communities and build influence. In addition, gaming sites such as Roblox and Twitch offer creators opportunities to monetize their work with potential brand partnerships, even as crypto currency sites like Rally.io empower creators to mint their own currency.

It’s a rich vein to mine, and big social networks such as Meta are responding by making themselves more attractive to creators (that brings us back to the news about Horizon Worlds and the resources Meta is making available). Going forward, more businesses will tap into niche networks to partner with emerging creators who are lesser-known but possess tremendous street cred. Will big-name partnerships with stars still thrive? Sure, but the social media icons are going to need to make room for the new kids in town.

What Brands Should Do

What does this mean for your brand? As you consider the opportunities inherent in the metaverse, we recommend that you:

  • Remember your audience. Do they care about the immersive worlds that the metaverse makes possible? That is, will marketing and advertising in the metaverse even matter to them—much less reach them? The biggest audience for the metaverse currently skews young, although some brands are making a concerted effort to reach out to older consumers. Ask yourself who your audience is, and if you have the resources and energy to reach out to them if their engagement with the metaverse represents a tougher sell.
  • Reflect on your appetite for experimentation. This is a new frontier that is already evolving. Are you ready to pivot—and pivot again—as conditions change?
  • Learn from businesses that have already found their marketing access point in immersive gaming worlds, which are, as noted, a popular segment of the metaverse.

Contact True Interactive

Want to learn more about the metaverse? Eager to dip a toe but looking for some guidance? Contact us. We can help you map a way in this new world.

What Does the Redesigned Instagram Content Feed Mean to Brands?

What Does the Redesigned Instagram Content Feed Mean to Brands?

Instagram

Instagram is giving more power to the people. Meta, Instagram’s parent, has announced that the social networking service will now give users two new ways to view their feeds: “Following” and “Favorites” (the standard “Home” experience, based on by the Instagram algorithm, is still an option too). Let’s take a closer look at these alternatives and what the development means for brands.

Following vs. Favorites vs. Home

So, what are these options, exactly? Essentially, Instagram wants to give users more control over what they see. For context, let’s review the experience Instagram users are accustomed to getting: the Home experience. This is an algorithm-based feed by which Instagram presents content that Instagram thinks users will be most interested in, based on their viewing habits. Notably, the Home experience is not purely chronological—it’s grounded first and foremost in user interests.

Instagram’s hunch is that the Home experience will remain the preferred go-to for users, so they’ve made it the default. As an Instagram spokesperson explained to CNET, “people have a better experience on Instagram with a ranked feed, so we won’t be defaulting people into a chronological feed.”

But now, based on a March 23 announcement from Meta, users also have the choice of a chronological experience with the Following and Favorites options:

  • The Following option presents a steady feed of posts from all the people one follows.
  • Favorites gives users the ability to further curate what they see by allowing them to designate up to 50 accounts they want to view higher in their feeds.

Users can make changes to their Favorites list at any time (people are not notified when they are added or removed).

Both Following and Favorites show posts in chronological order, making it easy to catch up on recent posts.

How Might Brands Adapt?

According to Ad Age, the chronological feed (for both Following and Favorites) may prove advantageous to advertisers and facilitate more real-time marketing opportunities. Amber Gallihar Boyes, director analyst at research firm Gartner, notes, “On the brand and creator side, there is an excitement and optimism about [the new structure]. I’ve seen creators just really feeling beaten down by lack of reach on Instagram and this gives them some element of control because they can make sure they’re connecting with their most loyal fans and followers.”

Live situations already lend themselves to Instagram, but the chronological feed, by creating a sense of immediacy, could prove especially beneficial to marketers during events like the Oscars or the Super Bowl.

“If you play it right [as a brand] you can almost . . . give people the experience that ‘if you’re not there when it happens, you’re missing out,’” Shawn Francis, head of creative at social media marketing company We Are Social, explains. He adds that it behooves brands or creators to ask “what content can you put out that makes people say, ‘I have to follow this brand in real-time.’”

In other words? Brands can lean into that FOMO.

They can also lobby to be on the coveted Favorites list: some creators are even putting out tutorials to teach fans how to add to their Favorites feed, presumably with the hope that their brand name will place high on the list when it’s created.

But achieving Favorites status is no slam dunk. “With 50 spots, people will be selective,” Nicholas Stoeckle, executive director of strategy and innovation at advertising and production company PPK, points out.

Competitive as it is, the Favorites list will certainly give brands a clearer sense of who their most loyal fans are, based on whether the brand makes it into a given Favorites section. Brands and creators will also get the opportunity to experiment with different posting times, to see if there are “sweet spots” for them in the chronological feed.

Contact True Interactive

Social media platforms are constantly evolving to meet users’ needs, and Instagram’s recent announcement is just one example. Trying to stay abreast of —and to leverage — these changes? Contact us. We can help.

Meta Misses the Mark; How Should Advertisers React?

Meta Misses the Mark; How Should Advertisers React?

Facebook Meta

Over the years, Facebook has been a Teflon brand. No matter how many controversies and setbacks the company has faced, it has seen its stock price and market capitalization soar. But all that changed on February 2 when Facebook’s parent company Meta announced earnings for the fourth quarter 2021. The company:

  • Missed its earnings estimates.
  • Reported that Facebook’s global daily active users declined from the previous quarter to 1.929 billion from 1.930 billion. Although Facebook has experienced drops in the United States before, this was the first time the world’s most popular social platform had experienced a decline in its user base.
  • Forecast weaker-than-expected revenue growth for the next quarter.
  • Said that the company would suffer a $10 billion revenue hit in 2022 because of the impact of Apple’s iPhone privacy controls launched in 2021.

Investors were stunned. The next day, Meta suffered a 26 percent drop in its stock price – the largest single-day drop in history. Not just for Meta. For any company.

Companies can have a bad quarter. But why did Meta suffer a historic drop in its stock price? There is no single, clear-cut answer. But a few factors no doubt played a role:

  • The drop in users, although not massive, stoked concerns that Facebook is finally beginning to feel the impact of its ongoing brand safety controversies and indifference from the growing Gen Z population. Losing members can be a red flag for advertisers, and Facebook needs advertising revenue to succeed.
  • Meta surprised investors by saying it still has not recovered from the impact of Apple’s consumer privacy controls. In 2021, Apple altered its operating system to require apps to get a person’s permission before tracking their data across apps or websites owned by other companies for advertising, or sharing their data with data brokers. This move curtailed the ability for advertisers and ad platforms such as Facebook to target digital ads across the web. Ad platforms such as Snapchat and Twitter said that the restrictions were either not hurting them or that they had figured out satisfactory ways to keep creating effective ads despite the existence of the privacy controls. It was alarming to hear that Meta had not figured out a solution yet.
  • Meta’s big bet on the next generation of the internet, the metaverse, is costing the company – a lot. Meta said that the company spent $10 billion in 2021 on various products that form the building blocks of the metaverse. That spend hurt profits. And the metaverse is still many years away, which has made investors ask: just how much is the metaverse going to cost Meta?

Even still, Facebook achieved $33.67 billion in ad revenue for the quarter, which was better than expected. Should Facebook’s advertisers be concerned? As an agency that helps many businesses build their brands and convert customers through Facebook advertising, we believe that if you advertise on Facebook, you should:

  • Keep advertising on Facebook if you are satisfied with your results so far. Based on our client work, Facebook continues to drive conversions even though the cost per conversion has increased and conversion rates are lower. Facebook remains an efficient and cost-effective alternative to competing platforms.
  • Adapt to the new reality of Facebook advertising. One of the challenges with Facebook advertising under Apple’s privacy controls is having access to less user data for targeting various audience segments with ads. We’ve been working with Facebook to develop workarounds such grouping our clients’ target audiences together to give the Facebook algorithm more data to work with a (as opposed to breaking up audiences into separate groups). We’ve also removed audience exclusions from campaigns. After we aggregated audience data and removed exclusions, we gradually began to see an improvement in ad conversions following a drop resulting from the privacy controls.
  • Keep an eye on the decline in users. Understand where they’re going when they leave Facebook. In particular, Facebook said that TikTok has emerged as a much stronger competitor. TikTok is especially red hot with the Gen Z generation. In addition, monitor sentiment among your audiences, foremost your customers. In light of Facebook’s ongoing controversies over privacy and the publication of harmful content, are your customers expressing concern? Is your brand safety at risk? (This may or may not be the case. As we’ve blogged before, social media will always be a messy place to live, and many brand have learned to live alongside that reality.

Advertisers have more choices than ever – emerging apps such as TikTok, retailer ad platforms such as Amazon Advertising, to name a few. The well-established ad platforms such as Google continue to launch new products. As always, we urge advertisers to stay on top of the evolving market. At True Interactive, we advocate for our clients by understanding how the ad industry is changing so that we can maximize clients’ return on ad spend. Contact us to learn how we can help you.

Photo by Dima Solomin on Unsplash

2022 Advertising and Marketing Predictions

2022 Advertising and Marketing Predictions

Advertising

Welcome to a new, adventurous year of advertising and marketing. The traditional tech giants are going to continue to fight each other for dominance – while TikTok will tap into the burgeoning creator economy to challenge them all for a slice of the advertising pie. Retailers everywhere are creating ad networks, but Amazon and Walmart have already established strong leadership early on. For the most part, businesses will be spending more – more on TikTok, more on Amazon, more on Google, and probably more on Apple’s fledgling ad business. But will they spend more on Meta? Read on for our insights into the year ahead.

Retailer Media Networks Proliferate – and Meta Loses Ground

One of the big stories of 2021 was the proliferation of media businesses operated by retailers such as Amazon, Macy’s, Target, and Walmart. In 2022, we’ll see more of them. Retailers are under great pressure to squeeze more margin out of their core businesses as the industry endures uncertainty. The most well established networks – Amazon and Walmart – are thriving because they tap into the data they collect about their customers (first-party data) to sell targeted advertising on their sites. In 2022, more retailers will use first-party data to help businesses create more targeted ads off-site, too, as an antidote to Apple’s privacy controls. In addition, non-retailers with large troves of first-party data, such as TikTok, will expand the same way.

I also believe Meta’s ongoing push into immersive reality will lose momentum. Meta has made an even bigger push into immersive reality (e.g., virtual reality and augmented reality) as part of its attempt to become the builder of the metaverse. Meta also intends for immersive reality to help the company maintain a dominant hold on social media and to squeeze upstarts such as Roblox out of the market. But the horse is already out of the barn: there are just too many players such as Roblox and Snapchat developing immersive reality applications for Meta to play copycat and use its size as an an advantage. And Meta has faced so much public blowback over its size and reach that squeezing out smaller players makes Meta more of a target for anti-trust regulation. Meta will lose ground, and gaming platforms such as Roblox will ascend in power.

— Tim Colucci, vice president, digital marketing

TikTok Dominates

TikTok is the world’s most visited site in the Internet in 2021, toppling Google, according to Cloudfare. TikTok will become the leader in paid social. Videos and fast-breaking cultural trends are becoming more prominent factors across all social media marketing, and TikTok has mastered both. Oh, and TikTok has another big trump card to play: the site is a magnet for Gen Z and Millennials, who together comprise about 42 percent of the U.S. population. As a recent New York Times profile noted, advertisers “are present like never before, their authentic-seeming advertisements dropped in between dances, confessionals, comedy routines and makeovers.” But TikTok is just beginning to monetize all that interest from advertisers. TikTok will follow the example set by Amazon Advertising and roll out more ad units that capitalize on the customer data the company is collecting. And look to TikTok to become a social commerce giant. If you thought 2021 was the year of TikTok, you ain’t seen nothing yet.

— Bella Schneider, digital marketing manager

The Creator Economy Gets Real

The creator economy refers to a class of businesses comprising millions of independent content creators and influencers. We are reading more about them partly because apps such as TikTok have given them more power and influence. The creator economy will become even more powerful. That’s because collaboration networks are proliferating. These networks give creators an all-in-one platform to create communities and build influence. In addition, gaming sites such as Roblox and Twitch offer creators opportunities to monetize their work with potential partnerships with brands, and crypto currency sites such as Rally.io make it possible for creators to mint their own currency. The big social networks such as Meta are responding by making themselves more attractive to creators. More businesses will tap into niche networks to partner with emerging creators who are lesser-known but possess tremendous street cred. Big-name partnerships with stars will still thrive, but the social media icons will need to make room for the new kids in town.

— Mark Smith, co-founder

Tech Titans Roar

We hear a lot about the big technology firms facing increased scrutiny from Congress and legislators around the world. But to me the more intriguing story is how the tech titans keep trying to outmuscle each other for advertising revenue, an example being Apple enacting privacy controls to hurt Facebook’s ad business. 2022 will ratchet up the fight:

  • Apple will start leveraging and monetizing the data they are collecting (and not allowing others to collect) in the form of some type of advertising platform. This is the culmination of Apple’s stricter privacy controls.
  • Google will remove more visibility and targeting options in the name of advances in machine learning and automation, thus protecting its core ad business by taking more control of it.
  • An increasing number of platforms will emerge that use first-party data to target and track and savvy advertisers will take advantage of this and diversify their advertising spend
  • Amazon will grow with even more ad units for Amazon Advertising and marketing offerings such as livestreamed commerce for businesses of all size, especially smaller ones. Google and Meta will lose market share.

Unfortunately, we can count on CPCs to rise across all platforms as they attract more businesses competing for ad inventory and keywords. It’s going to be a more expensive 2022, but also a more interesting one with more ad units proliferating.

— Kurt Anagnostopoulos, co-founder

Google Ads Become More Powerful

Given the evolution of keyword matching (now AI-powered to serve ads based on the meaning of a search query), and the simplification of the ad product offerings (as Google deprecating Expanded Text Ads next summer), we will see Google Ads become leaner but more powerful. Advertisers will be forced to rely more and more on Google’s algorithm to drive results – all this, at the expense of reduced control advertisers have over campaign settings (ad content, keyword matching, targeting choices, etc.). I believe the biggest changes will continue to happen on Google’s back end as it seeks to make the algorithm (automated bidding strategies used in ad campaigns) smarter. Thus, we will see increased focus on cookie-less conversion tracking and an expansion of first-party data collection capabilities in Google Ads (i.e., scaling up enhanced conversions).

— Héctor Ariza, digital marketing and analytics manager

Social Media Ad Dollars Get Redistributed

Lush Cosmetics recently said it is quitting Facebook, Instagram, Snapchat, and TikTok over concerns that those platforms have a negative impact on teens’ mental health. (The company will remain active on LinkedIn, Pinterest, Twitter, and YouTube.) Lush said it will happily lose $13 million in sales because of the digital detox. It remains to be seen whether Lush will reactivate the accounts it quit (Lush quit some social sites in 2019 before returning), and of course a big question is whether more businesses will take such a drastic approach. I don’t think we’ll see more businesses take the Lush approach – social media is just too important – but they will shift some of their ad dollars away from Facebook and Instagram. In the past, businesses have remained loyal to Facebook (now known as Meta) because the site is critical to their advertising and marketing strategies. But the whistleblowing activities of ex-Meta employee Frances Haugen have raised the stakes. She asserted that Meta has kept internal research secret for two years that suggests its Instagram app makes body image issues worse for teenage girls. Businesses will monitor what their customers, investors, and employees say about Meta especially in this era of purpose-driven branding. Some will shift their advertising to Snapchat and TikTok while Meta takes the heat for brand safety issues. But this shift may be temporary. Meta will probably mollify brands with some updates to its products to create more brand safety, as it is already doing with its news feed to address concerns over lack of user control over their news feeds. In addition, Meta faces the ongoing threat of regulatory oversight. More accountability will come to Meta in 2022.

— Beth Bauch, director, digital marketing

Contact True Interactive

To succeed in the ever-changing world of online advertising, contact True Interactive. Read about some of our client work here.

Image source: https://pixabay.com/photos/year-2022-track-new-year-calendar-6786741/

 

How Will Facebook’s Reputation Problems Affect Advertisers?

How Will Facebook’s Reputation Problems Affect Advertisers?

Facebook

Unless you’ve been living under a rock, by now you know that Facebook announced the creation of a parent brand known as Meta. Facebook still keeps its name to refer to the social media app. But Meta now coordinates Facebook, WhatsApp, Instagram, and other brands that Facebook has been launching or buying over the years. The announcement cast a spotlight on the fast-growing metaverse. But it also drew attention to Facebook’s ongoing reputation problems, which became more intense in recent weeks with the publication of the Facebook Files in The Wall Street Journal. Many branding experts and industry watchers asked whether the name change will help Facebook overcome its latest reputation crisis. I have another question: how much of a threat is Facebook’s (now Meta’s) reputation crisis in the first place?

According to the Facebook Files, Facebook has knowingly allowed its algorithm to publish harmful and divisive content on users’ news feeds. The accusations have been supported by documents shared by a former employee turned whistleblower, Frances Haugen. She has also shared her findings with Congress. The blowback has been strong. Legislators have accused Facebook of subverting democracy. Facebook bashers have vowed to stop using the app.

But what will advertisers do?

This is an important question. Obviously this is not the first reputation crisis Facebook has encountered — and I’m referring specifically to the social app Facebook, not Meta, WhatsApp, or Instagram. On at least one occasion, some advertisers have responded by boycotting Facebook temporarily or permanently. But Facebook’s advertising growth suggests that the company’s reputation problems have not resulted in a long-term advertising decline. Here are two reasons why:

Advertisers Are Used to Conflict

The fact that a publisher and aggregator of news content (which is what Facebook does) knowingly shares divisive information is not exactly shocking news to advertisers. Mainstream news media have been attracting audiences by publishing divisive content for decades, long before the internet existed. And they’re doing so today. As a result, advertisers probably have a higher tolerance for conflict than Facebook’s critics do. This, to me, is the most powerful and compelling point to bear in mind. Advertisers don’t want their ads to appear alongside inappropriate content. But no one is accusing Facebook of allowing that to happen. The existence of controversial content, in and of itself, probably won’t be enough to create an advertising exodus. So long as Facebook manages brand safety well (a problem that has vexed apps such as YouTube), advertisers will tolerate conflict.

It’s All about the Audience

Facebook’s strategy of building and engaging users has angered critics, but it has also helped Facebook build a bigger user base. This chart from Facebook’s latest earnings announcement is telling:

Facebook UsersAdvertisers are looking at these numbers, too. More users on Facebook is obviously attractive to advertisers. They’re going to go where the users go. It’s a simple as that.

The Real Threat to Facebook

Based on advertiser behavior, the bigger threat to Facebook consists of stronger privacy controls – especially from Apple. As widely reported, Apple rolled out an update to Apple’s operating system in 2021 that included an important privacy control known as Application Tracking Transparency (ATT). ATT requires apps to get a user’s permission before tracking their data across apps owned by other companies for advertising, or sharing their data with data brokers. Apps can prompt users for permission, and in Apple Settings, users can see which apps have requested permission to track so they can make changes to their choice at any time.

Advertisers have feared that ATT will trigger an uptick in users opting out to having their behavior tracked. Consequently, advertisers will have a harder time serving up targeted ads because they cannot track user behavior. This concern is well founded. As many as 96 percent of users in the United States are opting out of having their behavior tracked. And as a result, social apps have (so far) lost $10 billion in ad revenue. Facebook itself forecast a pullback in ad revenues for the fourth quarter because of the significant uncertainty it faces in the fourth quarter in light of continued headwinds from Apple’s iOS 14 changes.

If you advertise on Facebook, I’d love to hear your thoughts on this topic. What factors might influence your choices going forward?

Contact True Interactive

To succeed in the dynamic world of online advertising, contact True Interactive. We help businesses succeed with relevant and engaging advertising. Read about some of our client work here.