Is Mark Zuckerberg’s belated sorry enough to stop advertisers deserting Facebook? The jury is still out on just how much damage the social media platform has suffered over the Cambridge Analytica data scandal.
But there are suggestions that it could lose far more than the $50 billion or so that was wiped off its market value last week.
On Monday, the US Federal Trade Commission confirmed it has opened an investigation into Facebook’s privacy practices. Its shares fell as much as 5.7 per cent to $150.36 in morning trade, leaving it 22 per cent lower than its record high close of $193.09 on February 1st.
Commerzbank was one of the first companies to suspend its ad campaigns on Facebook, with its head of brand strategy Uwe Hellmann telling the German newspaper Handelsblatt: "We are pausing our campaign on Facebook. Brand safety and data security are very important to us."
It was joined shortly after by the web browser Mozilla, which also announced plans to pause its ads running on the social network.
“Mozilla is pressing pause on our Facebook advertising,” it said in a blog post. “While we believe there is still more to learn, we found that its current default settings leave access open to a lot of data – particularly with respect to settings for third party apps.”
The company was also warned that “enough is enough” by members of ISBA, a trade body that represents a large number of UK advertisers. Representatives were meeting Facebook on Friday to express its concerns in person and demand more answers.
As the organisation’s members represent more than 3,000 brands, one hopes that Facebook will have offered a bit more than the weak platitudes uttered publicly by Zuckerberg earlier in the week.
Facebook and its main rival Google are now the largest media players in the world with the former booking some $39.9 billion in ad revenues last year alone. Given its strong position, it will take a lot more than the recent scandal to stop brands from displaying their ads on the platform, even if some consumers walk away as many have threatened to do.
Of greater concern for advertisers will be the changes made by Facebook in the wake of the debacle. The company looks as though it may end up caught in the middle between trying to appease the general public while also still serving up the kind of data that made it so attractive to advertisers in the first place.
