Facebook Is In a Trust Crisis and It May Impact eCommerce Marketers

Source: Facebook

Last week on our site, John Hayes wrote an article in a bit of tongue-and-cheek fashion with the headline “Is This The Beginning of The End for Facebook?.” One week later, that article is less tongue-and-cheek and predicted concerns that have become a reality in just days!

The Cambridge Analytica scandal started to unravel a media and user witch hunt on the social media giant, not helped by a lack of response from Zuckerberg and Co. And then when Zuckerberg did speak, it was basically we are “sorry,” and that just isn’t good enough for lawmakers and users.

But wait, it gets worse. On Saturday, ARS Technica reported that Facebook was collecting all kinds of call and text data from Android phones from users that had installed its Messenger platform.

And then yesterday Reuters added that opinion polls in the U.S. and Germany show Facebook users are increasingly distrusting Facebook.

While there is a vocal #DeleteFacebook movement on Twitter and other social media, the impact of that movement is still unknown.

With over 2.2 billion users, is it too large to fail?

This page may be one of the most popular pages on Facebook this week. It explains how each user can download their personal data to find out what Facebook has been storing on them.

Facebook defends its data collection methods by saying its users gave permission to the social media giant to the data.

But let’s be real here, who reads any of the privacy policies that digital platforms require users to agree to before establishing their accounts?

Even those that try get lost in the legal language that is hard to understand.

Marketing May Change Drastically

But what may change is the value of Facebook advertising.

Besides the abuse of the unauthorized access to personal information on 50 million users by Cambridge Analytica, many marketers using Facebook ads have enjoyed some very detailed demographic targeting options the company offered.

While individual data was not shared with the advertisers and the metadata was only used for demographic targeting, much of this data may have been collected from practices that are now being questioned by users and lawmakers.

Facebook claims it will provide more privacy tools to allow users to adjust what the company is learning about them. Normally, this may mean a few people go into their settings and make some adjustments.

Of course, the EU already was forcing their hand before this mess happened, but it may have to make changes far beyond the EU’s requirements to keep users happy around the globe.

And U.S. lawmakers who have actually more power over the company than the EU or other global government entities, could drag Zuckerberg and Co. in front of highly publicized and volatile committee hearings.

While it trails Google in digital advertising revenue, it is the second largest digital advertising platform in the world. And Amazon is putting a lot of effort to expand its digital advertising to reach more brands regardless if they sell on Amazon or somewhere else.

Facebook has a lot at stake when it comes to its ad revenues.

And the danger for marketers is as Facebook users start scrubbing more personal data from their profiles and reducing the access Facebook has to other data on their phones, the metadata that made Facebook’s advertising platform such a success may become flawed.

Some users may also move to platforms that do not promote sponsored content as heavily as Facebook, or that offer less complicated privacy options to keep personal data private.

All of these behavioral changes may impact the way marketers have to place advertising.

Distrust in Facebook Messenger

Last year at Facebook F8, the company announced they were building out the Messenger platform to become a business tool for retailers to communicate with customers.

Some early beta programs have emerged since then. But now one has to wonder if this project may slow down as the company has to address their privacy concerns first.

And there is the question, has this breach in trust done too much damage already for Messenger to become a functional tool for business?

Lots of Questions

The damage is done, and Facebook handled it poorly so far. For eCommerce merchants that have relied on Facebook, there is a lot at stake here.

It may be too early to rethink marketing strategies, but online retailers should keep a close eye on ROI with Facebook advertising.

Taking out a few newspaper ads, isn’t that quaint for a digital company, isn’t going to cut it. One has to wonder if those ads were aimed at investors or users, because how many Facebook users still read actual newspapers….

Late Update to Story

This was added after first publication. FTC confirms they have opened an investigation into Facebook privacy practices. Full statement here.

We like to hear your thoughts about Facebook’s problems and if they may impact your business? Head over to our Facebook Discussion Group or use the comments section below.

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