We’re less than two months out from Facebook’s infamous announcement that it was suspending Cambridge Analytica for exploiting user data. Since then, news headlines about the company — and its haphazard management of user information — have looked like a PR nightmare from the sidelines, but the company’s Q1 revenue numbers tell a much different story.
Two weeks ago, Facebook reported ad spend on the platform was up 50 percent year over year, and its global daily active users increased by 13 percent.
“Advertising and protecting people’s information are not at odds. We do both. Targeted ads that respect people’s privacy are better ads,” said Facebook COO Sheryl Sandberg during the company’s earnings call.
While some may argue whether Facebook’s ad platform and its user data policies are at odds, the company’s ad revenue shows no signs that either party — advertisers or users — is going away.
Facebook advertisers are in it for the long haul
Aaron Goldman, the CMO for 4C, a digital analytics and marketing platform, says his agency saw continued increases in ad spend on Facebook following the Cambridge Analytica news.
“We saw a 62 percent increase in ad spend through 4C year over year in Q1 2018, and 7.2 percent week-on-week growth from March 17 (when The Guardian’s first Cambridge Analytica article dropped) to March 23,” says Goldman.
According to the CMO, Facebook ad spend jumped 14.5 percent between March 24 and March 30 — with a 9 percent lift in Instagram ad spend. Facebook delivered strong results throughout Q1 for the agency’s clients, with CPMs (cost per thousand impressions) down 18 percent and CPCs (cost per click) down 21 percent.
“As long as this performance holds, advertisers won’t stop investing,” says Goldman.
Socialbakers CEO, Yuval Ben-Itzhak, says his agency’s data shows Facebook ad spend has remained stable throughout the first quarter of the year.
“We analyzed data and believe that Facebook has seen next to no impact when it comes to brand ad spend since the beginning of the year,” says Ben-Itzhak. “We believe that the benefits offered by Facebook outweigh the privacy concerns, especially since there is no comprehensive alternative for the platform.”
Greg Finn, a partner at digital marketing firm Cypress North and Marketing Land contributor, says none of his agency’s clients voiced concerns over the Cambridge Analytica scandal. Akvile DeFazio, the president of the social media advertising firm Akvertise, says a few of her clients did voice concern, but none wanted to pull back on existing campaigns.
“Many small to medium-size business owners now seem to have a better understanding, which has led us to have more in-depth and higher-level conversations with clients,” says DeFazio. “Client education has certainly reached a new level, at least for the clients we’ve been working with in the last few weeks.”
John Lincoln, the co-founder and president of Ignite Visibility, says his clients show no signs of wanting to slow down their Facebook ad spend.
“Our clients have continued to spend more on Facebook,” says Lincoln, whose firm manages about $2 million a month in social spend. “The longer they have been with the platform, the better refined the traffic channel becomes at generating business. Because of this, we are seeing spends grow and more clients testing it for the first time.”
Facebook ad-targeting limitations prove to be a minor hiccup
Following the Cambridge Analytica announcement, Facebook began restricting the amount of user data accessible to apps and updated its ad policies.
Lincoln believes there was a small hesitation by users to click on ads during the scandal time period, but overall, he says Facebook’s return on ad investment has generally remained steady, even with all the changes. Ignite Visibility’s paid media manager, To-Van Hoang, says that a number of ads previously approved by Facebook prior to the Cambridge Analytica situation had come back with a notification that they were no longer allowed per Facebook’s ad policies.
“That process has been incredibly tedious but altogether harmless, since I know my ads are suitable to run, and usually, within minutes of submitting an appeal, they’re back online,” says Hoang. The paid media manager says recent changes to Facebook ad policies have impacted some of the agency’s client accounts.
“Facebook is steadily dropping third-party data providers, and demographics we used to be able to access are no longer available, so there’s a little bit of a blind spot in strategy that the entire industry has been working to fill,” says Hoang. “That being said, we have quickly developed systems to adjust for these issues.”
Lincoln says that Facebook still continues to be a great source of traffic, revenue and leads.
“With Facebook, there are so many options to target people on the platform. If those are reduced slightly, it does not eliminate the value. There is always remarketing, and there are always great targeting abilities,” says Lincoln.
In light of the recently introduced ad-targeting limitations on Facebook, DeFazio’s agency has started running test campaigns to be prepared in case specific ad filters are removed.
“With rumors of income-based targeting going away, we wanted to test some campaigns to see what performance will be like in terms of engagement and conversions without an income targeting layer,” says DeFazio. “Thus far, some campaigns are performing better and some are not.” She says that either way, the tests have been a worthwhile exercise.
As long as Facebook has users, it will have advertisers
Mac Delaney, SVP of media investment and strategy for Merkle, Inc., says their agency’s clients are taking a wait-and-see approach before making any investment allocation decisions around their Facebook ad spend. He believes marketers are doing a lot of listening right now as Facebook moves to give users more control over their personal data.
“Obviously, trends in how comfortable users are with Facebook and its partners having access to their data are critical to watch from this point forward,” says Delaney. “Whether users will begin to think twice about allowing an app to collect their data is one area we’re interested in watching, i.e., does the convenience of Facebook Connect outweigh any new concerns a user may have of their data being potentially mismanaged?”
According to Delaney, the industry is still some time away from being able to see the real impacts of the sweeping changes happening on the platform.
“Marketers accustomed to modeling audiences within Partner Categories will soon need to do so outside of Facebook prior to loading audiences into the platform,” says Delaney. “How quickly marketers will be able to change their process will depend on their understanding of what has changed and whether they have the right partners in place — data management, data onboarding providers — to help them smoothly pivot without skipping a beat.”
As to the future impact of the Cambridge Analytica crisis on Facebook advertisers and users, DeFazio says she’s not concerned.
“Facebook does have a challenging situation on their hands in that they have to balance out how to please both users and advertising businesses, as they depend on it for their own success,” says DeFazio.
4C’s Goldman says his company is not seeing any signs of a mass exodus from Facebook.
“Facebook provides a direct means of communication between a brand and customer. Any business with a wide customer base that wants to deliver a great experience where audiences are spending their time needs to have a Facebook presence,” says Goldman.
A recent survey from Reuters/Ipsos polling 2,000 social media users proves 4C’s findings — that the Cambridge Analytica data scandal hasn’t impacted Facebook usage. According to the survey results, 74 percent of the people polled use Facebook daily, with only 1 percent of the survey participants claiming to have deleted their Facebook accounts.
AppOptix, a mobile analytics platform, reports declines in short-term Facebook app use was nonexistent following the Cambridge Analytica situation. Based on data from more than 4,000 Android users, the mobile analytics company said, “Consumers shrugged off the incident and have maintained their usage patterns.”
As long as users continue to scroll through their Facebook feeds, it will be business as usual for advertisers. There’s no reason for a brand not to continue investing in a platform that delivers its primary advertising objectives: an extensive reach combined with comprehensive targeting and solid return on ad spend.