In an interview with Bloomberg, Facebook COO Sheryl Sandberg said that some companies have paused their advertising spending on the platform until they find out more about user privacy practices. The social media company has been under fire for its data collection and security methods after political consulting firm Cambridge Analytica collected information about as many as 87 million accounts. “We’ve seen a few advertisers pause with us and they’re asking the same questions that other people are asking. They want to make sure they can use data and use it safely,” Sandberg said, adding that she has been having “reassuring conversations” with those companies.
The Wall Street Journal reported in March that a handful of companies—including Mozilla, Sonos, Pep Boys, and Commerzbank—had temporarily pulled their advertising. Facebook executives reached out to advertising trade groups and agencies like WPP PLC, Dentsu Inc., and Omnicon Group in the days after news of the scandal broke to assure them that an audit of third-party apps was underway. While it’s unclear exactly how many advertisers in total have suspended spending, industry insiders told both CNBC and the Wall Street Journal that most companies won’t likely stop advertising unless users leave the platform en masse.
But while some marketers may be pulling ads because of user privacy concerns, Facebook also runs the risk of vexing others by making it more difficult for them to gather information on consumers in the name of privacy. Analysts had previously predicted that Facebook, which earns most of its revenue from advertising, would control 19.6 percent of the digital ad market in 2018. Facebook collects data on its users in large part to help companies target ads at certain demographics. There’s therefore a tension in the company’s efforts to address users’ privacy concerns while also assuring marketers that ads on the platform are effectively reaching those users.
“Marketers always want to know the extent to which ads have been consumed on social media. They want to know how much impact their advertising dollars have had for their company,” says Dipayan Ghosh, a fellow at New America’s Public Interest Technology initiative who previously worked at Facebook as a privacy and public policy advisor. “That desire directly contradicts user privacy.” (New America is a partner with Slate and Arizona State University in Future Tense.)
So if Facebook and other platforms like Google and Twitter start restricting features that help with ad targeting because of the Cambridge Analytica backlash, marketers may begin to reconfigure their advertising budgets to spend less on digital platforms. Facebook will have to pull off the precarious balancing act of keeping privacy-anxious users on a platform that makes money by analyzing their online habits.