Facebook at 15: An advertising titan that needs to grow up

Despite a wave of growing pains, Facebook’s revenues and users are still rising fast. But 15 years after it was founded, Facebook needs to prove it can be more than just an ad revenue machine and that it has earned its place in the digital media landscape.

When Mark Zuckerberg gave birth to Facebook 15 years ago, we can but wonder whether he envisioned it turning into the troubled teenager that it is today.

Growing up in the early noughties, the platform was mostly a big cringe-inducing hub of photos uploaded from digital cameras, unsolicited pokes from strangers and inane status updates that Facebook’s ‘memory’ algorithm makes sure still haunt you to this day – an addictive combination no doubt responsible for Myspace’s sad and swift demise not long after.

Now, the reality is very different. And like many parents who have to deal with inevitable conversations around booze, drugs and sex as their offspring reaches its mid-teenage years,  Zuckerberg has issues of his own to contend with.

Data privacy breaches, fake news, measurement errors, Russian bots, unwitting (or not) political interference, questions over the type of content it allows, not doing enough to protect the mental health and wellbeing of its users – all challenges Facebook is now having to address.

Facebook is long past being the “online directory that connects people through social networks at colleges” set up by a 20-year-old Harvard student in 2004. It enters 2019 as an untamed element of an unregulated digital ecosystem that has grown faster than can be controlled.

Yet despite the plethora of challenges, the numbers paint Facebook as a strong and sturdy ship surfing the relentless waves of a mammoth tsunami that should have sank it long ago.

READ MORE: Mark Ritson: Marketers’ silence on Cambridge Analytica speaks volumes

Of course, it is not just Facebook’s 2.32 billion monthly active users keeping it afloat. As of November 2017, six million advertisers have been injecting increasing amounts of cash and time into the platform, with that number likely to be much higher now.

In 2018, total revenue was up 37% to $55.8bn, while net income was up 39% to $22bn. Meanwhile, ad revenues rose 38% to $55bn as both daily and monthly active users grew 9%. Those numbers of course don’t just include Facebook the social network anymore – Instagram is likely responsible for much of that growth in ad revenues. But it is clear Facebook continues to be an attractive – and effective – place for many advertisers (whether they are concerned about the issues or not) to be.

But even if big advertisers did pull their spend, like Unilever threatened to do at the beginning of last year, Facebook gets a lot of its money from smaller businesses and the long-tail of advertisers. That in many ways has been the secret to its success – opening up the world of advertising to the local nightclub or wedding photographer.

That means that while major brands like Procter & Gamble and Unilever might complain about the “murky” digital media supply chain and call for action, if they left the effect on Facebook would be more of a ripple than a wave. The truth is that Facebook is much more powerful than the major brands that advertise on it.

The Facebook brand

That is not to say there isn’t work to do for Facebook. The ongoing negative headlines might not yet be impacting its business but they are impacting its brand.

According to a survey conducted by Toluna for the tech website Recode, 39.6% of US consumers cite Facebook as the website they ‘least trust with their personal information’. Total user growth suggests that isn’t impacting how people use the social network but anecdotally at least it seems people are using Facebook less, particularly in markets such as the US where growth is flattening.

Facebook recognises this, and turning around those brand perceptions will be first on the to-do list for new CMO Antonio Lucio.

Facebook says it is working towards being a more digitally-responsible business and there are those who are optimistic those efforts will pay off. It has made moves on election integrity, content governance, safety and security, data privacy and digital wellbeing, although whether you believe those go far enough depends on your views on Facebook’s role.

But let us not forget Facebook has gone from strength to strength in spite of these issues. That is because it still offers consumers the most convenient (and addictive) way to keep in touch with friends and family, and advertisers a way to reach audiences at scale with targeted and relevant messages.

It must not take this for granted, though. And while it has weathered the storm so far, the next few years are pivotal if Facebook is to prove it is more than an ad revenue machine and can instead play a positive role for brands, people and society.

Of course it could be argued that any changes now are too little too late; the damage – in many cases irreversible – has already been done.

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