Facebook’s Problems Illuminate Dangers of Scale

As if all the new blockchain companies trying to fix digital ad transactions weren’t enough, we will certainly face more scrutiny in the buying and selling of ads since it was revealed that a Russian troll bank connected to the Kremlin propaganda machine bought $100,000 worth of ads on Facebook during the last election. This was admitted by Facebook, which probably means it’s the tip of the iceberg. Underneath is an iceberg that could harm Facebook if the election revelations are looked at as part of  a pattern that includes Facebook’s recent gaffe with data reporting.

That gaffe, reported by CNBC,  was discovered by a Pivotal analyst,

Facebook’s Ads Manager claims a potential reach of 41 million 18- to 24-year olds and 60 million 25- to 34-year olds in the United States, whereas U.S. census data shows that last year there were a total of 31 million people between the ages of 18 and 24, and 45 million in the 25-34 age group, the analyst said.

“While Facebook’s measurement issues won’t necessarily deter advertisers from spending money with Facebook, they will help traditional TV sellers justify existing budget shares and could restrain Facebook’s growth in video ad sales on the margins,” said research analyst Brian Wieser, who maintains a “sell” rating on the stock with a price target of $140 for year-end 2017.

While the incorrect reporting of data is something Facebook itself has to fix, the propaganda problem is more difficult to address.

There is a lot of hand-wringing going on in our government and in our newspapers wondering how the Russian ad buy could have happened. But we in the industry know exactly how it could happen: Facebook Ads Manager. Anyone with a credit card  and a Facebook account can use Ads Manager, and several people making relatively unnoticeable buys of about $10,000 each could easily have the benefit of Facebook’s super-targeting abilities to hit very specific people with very appropriate messages that would resonate enough to cause them to change their behavior patterns or — we wonder — their votes.

Thus, the same specificity that brands love can be perverted by political organizations to manipulate minds.

How should we think about this?

In Europe, the GDPR addresses some, but not all of this by giving consumers more control over their data. However, we haven’t yet seen any expert analysis of how this would apply to Facebook, which is not a conventional publisher. In fact, Facebook has been reluctant to think of itself as a media company at all. In the face of these recent discoveries, that’s one thing we think will have to change. We may see the return of the ugly word “platisher” as we in the industry try to address these concerns.