Hark! Facebook PR Crisis! Is Facebook’s Fremium Model Under Attack?! Or Will a $100bil Facebook Share Buyback calm the crazies? Unless you’ve been visiting another planet in the solar system, you are now aware that social media behemoth Facebook Inc. (NASDAQ:FB) is in the midst of struggling through a PR Crisis Management episode. Actually, its not just a PR Crisis Management issue, its also an IR Crisis Management event given that investors in Facebook have suffered from a 3 day stock price hit of 20% from its recent record high. All of this is consequent to a security breach courtesy of so-called ‘data analytics’ firm Cambridge Analytica, a US subsidiary of a UK-based “political intelligence” consulting firm known as SCL Group. By all accounts, Cambridge Analytica, which has received $15million in funding from US hedge fund billionaire and Trump supporters Robert Mercer and his daughter Rebekah (the latter serves on Analytica’s board), managed to deceive Facebook advertising executives and pilfered personal information of some 50 million Facebook users as part of scheme to push Trump-friendly ad content to millions of Facebook users in advance of the US Presidential election.
The scheme involved Cambridge Analytica deploying a homegrown ‘psychographic targeting‘ application, which in adtech talk is a digital marketing tool by which the marketer utilizes a database of individuals and attempts to further capture some essential psychological state, or some particular combination of values and lifestyle, that imply a proclivity for the product in question. With that ‘intel’ in hand, the marketer then deploys ad content to those individuals in effort to sway or influence their so-called ‘mindset’. The upshot is the Mercer family-backed firm snookered Facebook’s system under the pretense of conducting a ‘academic research study’ and literally stole the records of millions of Facebook users. albeit no social security numbers or other credit-sensitive data was included. All for the end game of pushing Trump propaganda to voters in advance of the actual election.
The entire incidence has triggered outrage among a broad spectrum of groups, as well as a series government investigations in the US and the UK, not to mention a big blemish for Mark Zuckerberg and his team, and of course, a big headache for Facebook users concerned about their privacy. Let’s throw in a really big headache for shareholders of Facebook Inc., some of whom have already filed class action law suits against the company. Facebook PR Crisis Management wonks have been scrambling to contain the damage, which has already shaved nearly $30billion from FB’s market value, and unless “Zuck” grabs the bull by the horns, Facebook share price could drop another 20%-30% in relatively short order.
Caveat: I’m not an active user of FB personally and the only personal data that anyone could steal from my FB profile is perhaps my contact email address and some family photos. But I do oversee several company pages, including my firm’s (https://www.facebook.com/thejlcgroup/) and various client pages, including Prospectus.com. To me, all of this irrelevant; I don’t pay anything to be a Facebook user for my personal account, there is no credit card information to pilfer. I knowingly use the site and because its free, I can only presume–actually I have always known that any/all demographic elements of my personal profile are being sold to advertisers so they can push stupid ads at me when I log in.
How or why could anyone who uses Facebook not realize that those “what a coincidence ad banners” that appear when you are logged in are not a coincidence?! Those ads are tailored based on something you previously clicked on or something you posted that expressed interest in something, such as a movie, an automobile, a vacation destination, etc. etc.
Big News: Big Brother is Always Watching and NOTHING that anyone does online goes unnoticed. When using a free application, you are guaranteed that whatever you do, its capturing information from you that is being sold to marketers and advertisers. Period. This is the social contract we all agree to when using a free online service. If you thought otherwise, you’re completely naive.
Facebook PR Crisis Management case study is not comparable to the likes of Equifax database being breached to secure credit sensitive intel. Its not the same as a breach of Wells Fargo brokerage accounts, and not the same as the various national retail store brands that failed to keep credit card information secure. Those events involve more than a social contract because the data provided to those companies is represented to be secure and its really important stuff. More to the point, blaming Facebook for delivering deceptive ads that promote a political cause or candidate is ridiculous. Who told you to click on the ad?! Not Facebook! Who told you believe the bullshit those ad messages were conveying?! If I sent you a txt message that said “KILL YOURSELF IF YOU LIKE HILARY!” Would you do that?!
Dear Mark Zuckerberg-
Your defense strategy could be as simple as framing your case in a public memo as follows:
- People who use Facebook are doing so under their own volition and it doesn’t cost them a dime.
- There is no part of the Facebook user experience that requires clicking on an ad or clicking on a link to jibberish propaganda.
- There is no part of the Facebook terms and conditions that suggests or states we are not selling or otherwise providing advertiser access to profile information. Of course we are! How else do you think we can afford to provide the service of connecting with your social network?!
- If any Facebook user does not realize that whatever you post on your page or whatever ad you click does not ultimately fall into a database that can be harvested and used by advertisers and marketers, you have no business using our free social network. In fact, you have no business using any social media application that is ‘free.’
- PS Nothing is free, except maybe fresh air in Wyoming or Maine.
- Mea Culpa! We do vow to do everything we can to protect sensitive personal information such as your full name (unless you configure your settings to ‘show to public’) and your email address. when you use our service. If you are using a FB service that requires a credit card for payment, we have a robust security system to safeguard credit card information. But remember, software is called soft-ware for a reason. Its soft and can be bent by bad actors for nefarious reasons. However, in this case, we got snookered by a group that violated our advertiser contract. However unintended, we’re likely liable for having shirked a stated obligation and we’ll be subject to fines from government agencies and maybe lawsuits from share holders.
- We’ll likely end up making some kind of settlement insofar as fines and it will not be fun. That’s the price one pays for being in business.
- We won’t need to be forced to improve our processes; this incident was a breach of our security and was an affront to our entire ethos. We work on mitigating those types of intrusions every minute of every day.
- If any shareholder is disappointed and doesn’t want to own our stock, that’s fine, you are free to sell it, just like you were free to buy it and just like you were free to become a user at no charge.
- We hereby announce a new stock buyback program in which our Board of Directors has authorized the repurchase of $100 billion worth of outstanding shares. The Facebook Share Buyback will be implemented over the course of the next twelve months and we will be buying at prevailing market prices.
- We hereby announce a business strategy shift–one that intends to reduce our dependency on third-party advertising and seeks to capitalize on financial transactions and banking services via the creation of The Facebook Bank. We intend to introduce a full menu of most common banking and payment services, all complemented with a crypto-currency called Facebook Bucks.
- We hereby announce an update to Facebook Advertiser policy. ANY party that purchases advertising placement or a post promotion must identify the category of the advertisement, e.g. ‘consumer product’, ‘political’, ‘entertainment content’, ‘financial service’, etc.
- We will place a disclaimer on every ad identifying the category. Political ads will display name of ad sponsor.
- More to follow regarding new guidelines for advertisers in the days ahead.
Mark-If your team would like to engage our firm to assist, simply contact us via this link
APRIL 06 2018 UPDATE- FB IMPLEMENTS ABOVE 11-12!!!
(Variety)–“…The company is now requiring the administrators of popular Facebook pages to become verified, and also extending previous disclosure rules for political ads to issues-based advertising.
“Every advertiser who wants to run political or issue ads will need to be verified,” Facebook CEO Mark Zuckerberg said in a post on his Facebook profile page. “To get verified, advertisers will need to confirm their identity and location. Any advertiser who doesn’t pass will be prohibited from running political or issue ads. We will also label them and advertisers will have to show you who paid for them.”
Facebook PR Crisis Management Case Study-Memo to Mark Zuckerberg