The Social Media Customer

This is not a political discussion. We’re an advertising agency.

But with the amount of every company’s budget that has shifted to digital advertising in the last few years, it’s hard to ignore all of the issues going on in social media these days from a purely marketing standpoint. Because when it comes down to it, social media is us. It’s our customers. And that’s what we’re focused on. The customers.

While it may be easy to blow off all of these stories in the news today swirling around Facebook, Google and Amazon, we must pay attention. Too many companies have invested into building large marketing infrastructure around these platforms to pass these stories off as pure political fluff.

Catch me up on this Facebook issue

For sake of keeping this blog post under a few thousand words, let’s look specifically at the Facebook situation currently. If you haven’t been keeping up on the underlying story, here’s short rundown of what happened.

• 2010
  In 2010, Facebook released a feature on the platform called Open Graph. This led to some advancements that you’ve probably used – the ability to login to a website using your Facebook account, a Like button that could be placed on your website, and an embeddable activity feed. But it also did one other important thing. For developers, it allowed access to your Facebook data – and if requested, your friends data – through the API.
• 2013
  A developer named Aleksandr Kogan creates an app called thisisyourdigitallife. It was a personality quiz that 300,000 profiles allowed to access their data. Kogan claims in the app that the data collection is for academic uses only. But because Facebook allowed the app to access not only those original profiles, but all of their friend’s data as well, the app collects data on 50 million profiles. This number may be up to 87 million profiles now.
• 2014
  Facebook makes some changes to Open Graph, including not allowing apps to access friend data anymore. However, this change is not retroactive to older apps.
• 2015
  During the Presidential race, the Cruz and Carson campaigns work with a company called Cambridge Analytica to help develop psychographic profiles on voters. Cambridge Analytica is the incarnation of Kogan’s original app.
• 2016
  The Trump campaign hires Cambridge Analytica for the same information to help digital marketing on the campaign.
• 2018
  In a story in The Guardian and New York Times, Christopher Wylie tells the story of Cambridge Analytica and how digital profiles were created and used in digital marketing efforts. Less than a month later, Mark Zuckerberg is testifying in front of Congress.

The important year in this chain of events is not necessarily 2016 or 2018 (remember, we’re not focusing on the politics here), but 2013. To this date, we can find no source saying that Kogan’s app accessed any information against any terms of service. The app provided access to 87 million profiles per Facebook’s own tools, their own terms, and a user’s permission. It wasn’t until that data was used outside of academic purposes was there an issue.

Is it just Facebook?

It would be easy to just point to Facebook and say, “well, they’re the rotten apple.” And they have some problems other than just the data sharing – this year they had their slowest growth since 2015 and usage has dropped by 50 million hours each day after the latest news feed changes. But there are some other signs that the whole social media realm has some issues.

Twitter seems to always be in a state of turmoil. Their famous employee retention issues at the top levels of management may just be the start. An open platform with little control over user behavior has led to a huge harassment problem from all angles, with little in the way of a solution. They made money for the first time ever in the last quarter of 2017, but usage in the US dropped for the second time in the same year.

Millennial darlings' Snapchat recently announced a layoff of 10% of its engineering team, about 120 people, in March. Its losses in 2017 - $3.45 billion. Their stock is currently trading at about $8.00 per share less than the IPO. Snapchat recently redesigned their user experience – and a million people signed a petition to roll it back to the previous version as cries of user dissatisfaction grew.

Even a company that seems like an old guard at this point, YouTube, is coming onto some data issues. The popular YouTube for kids has come under fire for allowing some very un-kid friendly videos to flow through their filter. And on the data front, the privacy aspect rises again with children as YouTube has been shown to be collecting data on minors which violates a children’s privacy law.

Is social media going to collapse?

Let’s be realistic in this prediction – social media is not going away any time soon. The sheer size of the ecosystem alone should be enough of a sign that we’re not losing Facebook or Twitter in the near future.

• Facebook has 2.2 billion users as of the end of 2017.
• In 2017, Facebook reported $40.7 billion dollars of revenue with a $15.9 billion dollar net income.
• Facebook owns Instagram and WhatsApp.
• Twitter grew by 4 million new monthly users in Q3 of 2017.
• That brings Twitter’s monthly active users up to 330 million.
• 73% of all US adults say that they use YouTube.

If we could only be so lucky in all of our businesses to have a 73% national market penetration rate. To have 2.2 billion customers. To have $40.7 billion dollars in revenue. While we recognize that we’re talking about relatively young businesses with growing pains, we must also recognize that we’re talking about businesses with 25,000 employees (Facebook) or even 3,300 employees (Twitter). Even with their layoffs, Snapchat still employs approximately 3,000 employees. And Facebook, Twitter, and Snapchat are all traded publicly.

These are big businesses and they’re not going to disappear overnight.

Do they grow customers?

So what’s our real concern? Our concern has to do with their customers. Social media relies on customers to keep it going. Without subscribers, there is no “social”. Without customers, there are no major advertisers. Without subscriber growth, it’s hard to keep investors happy. Social media has a lot of masters to serve now, and currently it doesn’t look like the most important one – customers – is what they’re focused on. When 32% of Americans think your product is having a negative impact on society, you may have some issues.

The famous saying is that “if you’re not paying for the product, you are the product.” And we as advertisers have relied on that. Even if we’re not engaging in complicated, expensive, and sometimes questionable data mining and engagement strategies, marketers love the basic data that Facebook provides to us from user profiles. Our hope is that we eliminate waste and increase the chances of providing relevant advertising to a person. But even we have to admit it can be a bit creepy at times.

And now, with a few more details released on how Facebook collects data and what they do with it (shadow profiles and tracking you around the web), many people are starting to reconsider how and what they share online. And thus begins the problem. When Elon Musk is deleting Tesla’s Facebook page; when Steve Wozniak is publicly deleting his account – it matters. Zuckerberg shows up in front of Congress for two days and #deletefacebook starts to gain steam. And suddenly we’re writing stories about MySpace Tom again.

Ahh, MySpace. Remember them? There was a time where we didn’t think they would die either. Social media companies are no longer the hustling founder in the dorm room creating a new site. These are large companies and they’re feeling the growing pains of changing their culture into such. How the leaders of these companies navigate waters will decide whether they turn into blue chips or another pets.com.

So which is it – dying or great opportunity?

Marketing folks tend to be very malleable people. Tell us that the customers have moved to this media and we figure out how to use it to our advantage. Tell us that they left and we leave too. But that is all rented land. Just like a rented house, you can’t put on an addition if you want. And you’re not building equity for yourself, you’re building equity for someone else.

In the end, it’s both. Currently, it’s still a great opportunity. But that shouldn’t stop you from hedging your bets. In your marketing, use all of the tools available to reach your customers effectively. We’re still having great luck for clients with Facebook ads, Instagram ads, and Google AdWords. We’re buying Snapchat filters. But we’re also investing in blogs. We’re doubling down on websites and email campaigns. We’re using the rented land to help drive traffic to the owned assets, and in the end, that is the best strategy for now and forever more.