Why Facebook's Downfall is the Users' Gain


A few weeks ago, Facebook’s stocks plummeted, hard.

In fact, it had been falling little by little since Mark Zuckerberg last made a public announcement regarding the scandal involving Cambridge Analytica and the 2016 election back in March. But that absence did not make the heart grow fonder, and instead, as Facebook started rolling out changes to the platform over the summer, on July 26th, both audiences and Wall Street reacted in kind—with Facebook’s stock taking the biggest single-day tumble in stock market history.

So what was the damage? The social network’s stocks fell a full 19 percent, kicking Zuckerberg off of the list of top five richest people in the world. In one day, Zuckerberg himself lost $16 billion dollars. That’s billion with a ‘B’.

No, this isn’t another article about politics. Instead, we’re going to be talking about how this will affect both marketers and users alike, and why this drop is happening so suddenly—even after news about the 2016 election broke, well, a few years ago. So let’s start with the marketers.

Why this hurts marketers, just like, so bad

Marketers have been using Facebook in a myriad of ways, for years. We use it organically, yes, but its paid function is really where it’s at. For the last few years, Facebook has made its money off of the pay-to-play model, sequestering organic posts to the dim light of the internet graveyard, and boosting paid posts into the spotlight.

And for a long time, it worked. That is, until the 2016 election.

Under intense scrutiny from stern lawmakers, incensed users, and stressed shareholders, Mark Zuckerberg, et. al., have been working tirelessly to prove that they’re on the side of the users (all the while working to align themselves under new GDPR regulations). So they’ve pivoted course—a valiant effort on Zuckerberg’s part, and great for the everyday Facebook user. But for the marketer, here’s what that means:

  • On July 1st, marketers could no longer create or edit existing campaigns using “non-EU Partner Categories”. These ads would just run and exist until September 30th.
  • As of October 1st, Facebook will disallow all ads using certain kinds of private, third-party targeting as well as some public targeting options. This includes:
    • Behavior targeting
      • Including purchasing behaviors and in-market targeting
    • Household income and home value targeting
    • Targeting that uses third-party data sources, both private and public

Many marketers are left with categories that target users based off of interests, many of which just aren’t as razor sharp as previous targeting parameters would allow.

Why this is so great for users

For all the obvious reasons, of course. No longer will users be targeted by those looking to profit off of behaviors (at least not as much as with previous years, anyway) — which was a huge sticking point for many frustrated by Facebook’s involvement in the Cambridge Analytica scandal.

In previous months and years, marketers could track campaigns based off of predictions, such as “Behavior > Likely to Move > in the next 6 months” or “Behaviors > Charitable Donations”. Marketers could target you if your Anniversary was within 61 - 90 days, if you spent your budget with credit cards, cash only, or with high-end department store cards; Facebook could target your investing habits, your banking practices, they could even tell if you'd recently traveled. Facebook had the ability to understand its users at a highly personal level. They could tell if you are a commuter, business traveler, or timeshare owner.

The options were limitless, vast, and extremely razor sharp, helping marketers who were working on thin margins to meet their monthly, quarterly, and yearly goals. But how the wild west once was, no longer is.

This is both a good thing for so many advocates of data privacy, so many users who maybe didn’t want their every movement tracked (who does?) and so many everyday people who just wanted to reconnect with their old high school sweetheart, favorite band, or family member.

But for the marketer, there’s blood in the water, and as the company starts realizing these changes, the stocks will continue to plummet. But Facebook is agile and fast, and for now at least, they can tread water.

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