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New York Ad Week Reveals Facebook’s Problems

New York Advertising Week was very revealing, both about the state of the industry in general (existential angst), and about Facebook’s problems in particular. I predict by next year there not only won’t be a duopoly–that’s well on the way because of Oath and Amazon–but will be a considerably more open marketplace.

Facebook has begun selling video ads through a program called In-Stream Reserve. Similar to YouTube’s Google Preferred program, In-Stream Reserve puts a velvet rope around Facebook’s most prized video inventory and sells it as a standalone package. However, what Facebook considers prized programming may not match with advertisers’ expectations, especially among TV ad buyers who are accustomed to buying individual programs on linear TV and may be unfamiliar with Facebook shows like “Fear Pong” and “Truth or Drink,” which along with MaxNoSleeves are also part of In-Stream Reserve.

When Facebook pitched the program as a test earlier this year, it asked advertisers to commit to spend $750,000 over three months. The price tag has since dropped to roughly $250,000 over three months, according to two agency execs with knowledge of the matter. A Facebook spokesperson declined to comment on pricing.

And from Casey Newton’s newsletter, another problem:

“One, my people are mad at Facebook for requesting that they register as political advertisers in order to promote their gay cabaret shows. Eli Rosenberg reports in the Washington Post:
The Washington Post found dozens of advertisements mentioning LGBT themes and words that the company blocked for supposedly being political, according to a public database Facebook keeps.
The rejections, the majority of which Facebook told The Post were in error, underscore the company’s challenges in regulating the massive amount of information flowing through its service, an issue that burst into the fore after the disclosure that Russian-state actors used advertisements on Facebook to sow discord during the 2016 U.S. election. But they also touch on a deeper tension as the company seeks to better regulate political uses of its platform. Though Facebook has taken pains to appear neutral, the censorship of LGBT ads, however inadvertent, points to the company’s difficulty in finding a middle ground in a tense national climate where policy increasingly hinges on fundamental questions about race and identity.
It’s too much to say that these ads were “censored.” Registering as a political advertiser is certainly a hassle; it involves the US Mail. But Facebook didn’t reject the ads so much as it requested more information about the advertiser — which, as the Post notes, the company later admitted that it did in error. Securing the platform means hassling lots of people, some of whom will be hassled unfairly. “
All this serves to convince me that next year will be a better year. And as Will Smith said, “nothing is more valuable than your gut. The metrics are there just to train your gut.” I trust my gut about the state of the ad business all the time, and we’re still here.

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.

 

Facebook Moves Toward Ads in Messenger

“I don’t think ads are the right way to monetize messaging,” said Mark Zuckerberg on an analyst call two years ago.  But that was in reference to What’sApp, which he bought. On Messenger, which he built, he apparently does plan to run ads eventually .

Fortunately for the 800 million of us who use Messenger every day, it will involve a bit of work for brands to begin to advertise. First they will have to get us to engage with them. I’m guessing this would have happened more surreptitiously if a document Facebook sent to its largest advertisers hadn’t been leaked. In the document, Facebook revealed that it would only allow brands to send messages to people who had already communicated with the brand.

That’s not very different from the way Pages works; if a user posts on a page, the brand is “allowed” to communicate back. And last March, Facebook began to allow brands to give customers receipts for e-commerce purchases through Messenger, as well as to provide customer service. The camel’s nose has gone way under the tent.

But here is what’s been happening in the background, according to Tech Crunch:

Over the following months, Facebook enhanced chat capabilities for businesses by letting them show a big “Send Message” or “Contact Us” button on their Page, create saved replies, show a badge that grades them on how fast they respond, and reply to wall posts with private messages.

Facebook also recently introduced “Click To Message” News Feed ads that let businesses pay to get people to chat with them. Plus, it’s been secretly testing a chat bot platform that allows developers to create e-commerce experiences and personal assistants within Messenger.

 

There seems to be a realization here that messaging will be the new operating system for mobile, and that consumers want to be able to do as much through their messaging apps as possible. The market leader here is WeChat, the dominant player in China, which allows users to send cash, make calls,hail cabs and make purchases. As of last summer, ten million apps had been built for the platform.

Facebook has responded: 

Earlier this year, Facebook rolled out a bunch of new features for its Messenger platform. In March, Facebook announced Messenger Platform — which lets developers build more functionality and features directly into the Messenger app (being able to track your packages in-app, for example, or embedding media and GIFs into your messages).

In addition, you can now send your friends real money, make free voice calls, and effectively use Facebook as a mapping service from inside its Messenger app.

So Facebook has been making it easier and easier for brands and users to have a conversation, in preparation for the day when it will launch ads in Messenger. You will start to receive them, and you may never know why.