Faith in Face­book and oth­er plat­forms has been shak­en, which could alter their mon­ey-mak­ing mod­els.

3 min read

Opin­ions expressed by Entre­pre­neur con­trib­u­tors are their own.

When the con­cept of “influ­encer mar­ket­ing” emerged, it was the first time in decades that adver­tis­ing seemed authen­tic. This was par­tic­u­lar­ly time­ly, giv­en how most peo­ple had been avoid­ing paid pro­mo­tion by any means nec­es­sary (ad block­ers on the inter­net, time-skip­ping DVRs on tele­vi­sion, etc.). But in the wake of rev­e­la­tions like Face­book’s Cam­bridge Ana­lyt­ics pri­va­cy scan­dal, social media — the pri­ma­ry vec­tor by which influ­encers plied their trade — became less trust­wor­thy than ever, lead­ing many to won­der about the impact on ad rev­enue and how social media on the whole would respond.

The Lack-of-Trust Effect

The 2018 Edel­man Trust Barom­e­ter presents a stark pic­ture of just how much trust was lost. In the Unit­ed States alone, user con­fi­dence in social-media plat­forms declined 11 points over 2017’s fig­ures. World­wide, mere­ly 41 per­cent claimed they trust­ed social media. Worse, 40 per­cent of respon­dents sub­se­quent­ly delet­ed a social media account, and gov­ern­ment watch­dogs have increas­ing­ly tar­get­ed social-media firms with antitrust actions. 

Relat­ed: How Much Should You Spend on Social Media Mar­ket­ing?

New Angles

Some­times, poten­tial solu­tions emerge that can help shore up the loss­es. Face­book, for exam­ple, report­ed a 28 per­cent increase in ad rev­enue year-over-year for their most recent quar­ter; amount­ing to over $16.6 bil­lion. The cus­tomer tar­get­ing-capa­bil­i­ties on Face­book are so robust that brands con­tin­ue to use the adver­tis­ing plat­form. In addi­tion, Insta­gram Sto­ries added sig­nif­i­cant­ly to the company’s bot­tom line.

Still, trust will need to be regained, and improve­ments have to be made in the pro­tec­tion and use of infor­ma­tion. “We can’t assume that our pri­va­cy is being respect­ed, even with laws like GDPR,” says Jon Gill­ham, CEO of Blade, a pair of brows­er exten­sions that block ads and replace them with adbank-pow­ered ads offer­ing cryp­to rewards. “Cur­rent tech­nol­o­gy is built to ben­e­fit com­pa­nies and share­hold­ers, not end users. We will con­tin­ue to see tech giants use sneaky tac­tics that exploit user data and out­wit reg­u­la­tions until adver­tis­ers, pub­lish­ers and end users actu­al­ly choose to use pri­va­cy-respect­ing plat­forms.”

Relat­ed: 4 Tips for Launch­ing Win­ning Snapchat Ads

Focus on Innovation

Lost view­ers will even­tu­al­ly lead to lost ad rev­enue, and the only way to get that rev­enue back is with improved pro­tec­tion for users. That’s going to require new tech­nol­o­gy, and already, some are look­ing to blockchain to address the short­fall. Face­book’s own con­tro­ver­sial Libra pro­gram hap­pens to fea­ture cryp­tocur­ren­cy at its base.

Revenue Beyond Advertising

Social-media providers may have start­ed to see the hand­writ­ing on the wall for rev­enues relat­ed to adver­tis­ing and are work­ing to branch out. Again, Face­book’s cryp­tocur­ren­cy plan could deliv­er a new source of rev­enue, but social media plat­forms like Pin­ter­est and Insta­gram have been work­ing to serve as chan­nels for sell­ing goods. On the sur­face, it makes
sense; peo­ple are already on the site to look at goods, so why not inte­grate buy­ing options to turn the win­dow shop­ping equiv­a­lent into a reg­u­lar shop­ping oppor­tu­ni­ty?

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