Category: Social Media

When the Cambridge/Facebook scandal first broke, financial analysts held their breath to see if ad dollars would flee as the depth of the breach in trust became obvious.

This question seemed settled with Facebook’s crushingly impressive first-quarter financial results, which reassured analysts that advertisers merely “shrugged” at this news, as they had to all previous tracking glitches, algorithm misfires and feature failures. In fact, there was growing consensus that as long as users stick with Facebook, advertisers will stick with Facebook too. A shrug, many believed, was marketers’ proverbial white flag of surrender to the ad duopoly that dominates the marketer’s landscape.

Yet it is a mistake to take the “Facebook shrug” at face value because there’s a lot going on beneath the surface that will significantly impact Facebook’s financial future. In fact, advertisers haven’t capitulated but are quietly rethinking Facebook’s role as part of a new and dynamic trust-marketing architecture built on three principles:

1. Reunification of media and creative functions under one agency roof

Facebook became a mega media platform precisely because it “re-bundled” media and creative, filling a void left by the “Great Unbundling of the 1990s,” in which clients sought to manage lower media labor costs separately from high creative costs. Today, though, the “unbundled” agency model is counter-productive because media has become as labor-intensive as creative work (maybe more so). Beyond that, trusted marketing relies on data to drive both creative and media, requiring a unified execution plan—from messaging to media. As agencies become re-integrated, they will re-allocate Facebook budgets by choosing newer technologies to express their integrated brand marketing visions.

2. Emergence of “brand to demand” contextual marketing

The ability to link branded content activities directly to sales or leads, sometimes called “brand to demand” marketing, remains the gold standard but is elusive because ad tech is so fragmented. Here, too, Facebook stepped in to give advertisers a seamless single platform to run branded campaigns along with large audiences to slice and dice at will. Yet since the Cambridge episode, hallmarks of Facebook vitality such as time spent there have taken a hit.

Edison Research earlier this year found that for the first time since 2008, the portion of Americans reporting they currently ever use the service has declined to 62 percent from 67 percent among Americans at least 12 years old. New data from Nielsen also shows that, significantly, Facebook’s core platform lost 18% in time spent last year. As Facebook’s ubiquity erodes, advertisers will adjust budgets and turn to new alternatives for “brand to demand” acquisition marketing.

3) New priority on establishing trust with consumers

Brands understand creating trust is very very tough but a critical competitive differentiating attribute. Facebook helped advertisers establish trust through the Facebook “trust halo” but this too is declining since the Cambridge Analytica scandal. Now 66 percent of consumers have lost trust in Facebook, according to an NBC poll. The financial consequences of this steep loss of trust are significant for Facebook. Increasingly, advertisers will divert funds into new communications tactics—i.e.—advocacy advertising that don’t undermine brands’ trust efforts, visibly moving brands closer to consumers’ evolving “trust” demands and further from Facebook.

Whether Facebook can withstand any storm is a hypothetical question, but what is not in doubt is that post-Cambridge, advertisers will fundamentally change how they use Facebook. And in the process, they will fundamentally change Facebook forever.

Even Snapchat publishers are switching to video.

Hearst’s Sweet, the first Snapchat-only media property, is closing its daily digital magazine, but the brand will be kept alive with a new show under that name. Other video titles will be available as well. The publisher has fired some staff as a result of the change, but would not say how many people.

“Our video-focused stories have always been a consistent performer, so we’ve decided to focus on that format exclusively for the Sweet channel going forward,” a Hearst Magazines spokeswoman said in an email statement. “We are currently in development on a slate of new shows, one of which will be called ‘Sweet.'”

In 2015, Snapchat launched Discover, a media section inside its messaging service, with about a dozen publishers, including Hearst, BuzzFeed, Vice, DailyMail, ESPN and Comedy Central. The publishers built daily channels filled with multimedia articles, videos, GIFs and other Snapchat-inspired flair. Later that same year, Snapchat and Hearst Magazines teamed up to create Sweet, a youth-serving lifestyle and culture publication.

Shows are different than the daily Discover channels, less like digital magazines and more like short-form television programs. Last year, Snapchat started focusing more on video and media companies like Viacom reimagined MTV shows like “Cribs” to fit the app. Snapchat is competing with Facebook, Twitter and YouTube for this type of mobile media entertainment to attract younger users, who watch less ad-supported TV.

Hearst would not say how many shows it was interested in developing for Snapchat.

Sweet, which Hearst said has 5.5 million subscribers on Snapchat, has stopped putting out new content, but plans to return to the platform under its new video focus in September. Hearst declined to comment on whether Sweet was profitable and how it measures its success. Sweet went through a round of layoffs last year, according to Digiday, including then-editor-in-chief Luke Crisell.

Sweet could keep its costs down and advertiser interest up by tightening its focus on a select slate of shows instead of producing a daily magazine, according to digital media industry executives.

“Shows make a lot of sense for the Sweet brand,” says a digital publishing executive, who works closely with Snapchat and spoke on condition of anonymity. “They have a very targeted young audience, and this could give them the room to breathe, to create premium video that works for brands.”

Snapchat splits revenue with its media partners, which comes from commercial breaks and brand integrations in the programs.

Snapchat had a redesign this year, which made the Discover section even more competitive for media, because all the Shows, digital magazine channels, and video stories now appear in the same stream. Sweet may have had a hard time in that environment, because it got lost alongside too many rivals, even other youth-focused publications from Hearst like Cosmo and Seventeen.

“Discover is now full,” says the digital publishing exec. “There are so many other publishers there with much clearer brand propositions than Sweet.”