Face-to-face with Facebook in California
With its communication platforms Instagram and WhatsApp, Facebook is one of the world's largest internet companies. Founded by eternally preppy Mark Zuckerberg, Facebook has mainly used advertising to nearly quintuple annual revenues from $12.5bn to $55.8bn over the last five years. Net earnings have grown even more extravagantly from $2.9bn to $22.1bn during the same period.
But what would any Silicon Valley tech giant be these days without a good old-fashioned scandal? Facebook has not failed us and has duly broken the 11th commandment: 'Thou shalt not get found out.'
In 2018 its management was accused of having passed on personal user data to Cambridge Analytica two years earlier.
At the time, the now defunct UK political consulting firm had been working for Donald Trump's presidential campaign team. The US Federal Trade Commission has since rapped Facebook over the knuckles with a $5bn fine for the data breach.
Of course, this is mere pocket money for our laid-back Californians. But it will be considerably harder to sell the world on the data security of their proposed digital currency, Libra.
Meanwhile the US Department of Justice is investigating Facebook, along with Amazon, Apple and Google, for alleged monopolistic activities. This is grist to the mill of those social philosophers who fear that the so-called FAANG companies have become too powerful.
Doubtless, EU bigwigs will also be watching the DOJ investigation closely for a chance to do some political grandstanding. At any rate, it all makes for an interesting interview...
"You can judge a company by where they make their investments"
But they are. We work with third-parties on both audit and accreditation. The Media Ratings Council audits to see if we actually deliver the impression we say we do. Our first-party impression reportings on Facebook and Instagram have already been accredited by the Council, and its audit of our third-party viewability system is currently running.
In our analytics tools we offer all the metrics an advertiser could potentially be interested in.
But in Germany, Facebook doesn't follow the standard established by the advertising industry...
I'm aware of different standards in different countries, but we try to create a global standard and processes. We also have third-parties that verify our data. We now have more than 40 partners who focus solely on verifying our metrics. These include global partners such as Nielsen and Integral Ad Science as well as local German partners such as Meetrics.
German brand manufacturers tell us that in the good old days everything was free, but now Facebook suppresses their organic content and drives them into costly advertising. Fair comment?
It's true that organic content from businesses has declined. But there is certainly no suppression of contact; it's just a question of scale.
We have 2.7 billion users and seven million advertisers on our platforms. So there is way too much content for any person to consume. We have to make decisions about what is the most relevant content for each user.
Even with their friends. If you have a hundred friends, for example, you might not see all their content every day. Based upon your interactions, we might identify a subset of that group that is most relevant to you, so you see more of their content.
Marketers criticize that you create too many new advertising options. Do they have point?
It is fair to say that we have to do a better job on simplification. We need to make it very easy for marketers to find the best way to spend their budget. Therefore we have built some tools over the last year to do this automatically.
For example, a customer can use 'campaign budget optimization'. He can fill in what his business objectives are, like more app installs, store visits, or clicks on his e-commerce site. Then the infrastructure optimizes how his budget is spent.
The biggest thing we have to do is to keep bad content off our platforms. That is why we're making significant investments in safety, security and privacy, while continuing to grow our community and our business. We now have more than 30,000 people working to detect and protect users from bad content. Moreover, we invest heavily in strong AI to keep off bad content.
But these controls aren't always sufficient...
They're never going to be perfect, of course. So there always might be an environment where an ad within a video or an article could be perceived as sponsoring bad content.
But in this case we have brand safety controls on three different levels: First, limited inventory, which is very restrictive and which offers maximum protection; secondly, standard inventory, which provides moderate protection; and, lastly, full inventory, which selects minimal protection so that ads may be delivered to all eligible content.
In Germany the number of daily active users is stagnating on Facebook. How will you make it grow again?
It's true that Facebook is growing more slowly than Instagram, which is doing incredibly well. But we are still optimistic that both platforms have a lot of room to grow. There are different strategies for each. With Facebook, we are talking more about the benefits of communication within groups, while on Instagram we focus on features like stories or commerce-related functions.
Facebook plans to move deeper into e-commerce, what exactly are you planning to do?
We approach e-commerce in the same way as we do a lot of our development. We look at what people are already doing on our platform and how can we help them do it better. Across the globe people are selling and buying things on Facebook, Instagram and WhatsApp.
Before any discussion about our commerce strategy, people in India, Thailand, Indonesia, Brazil or Africa were already using their Facebook posts or groups to sell products.
So what are you doing now?
We simply reduce the friction in that. It's still challenging to do business and e-commerce on a mobile device: It's small, and people have to enter all their information. So we're building features like Instagram Shopping to improve the mobile customer journey.
So will Facebook eventually become an online retailer like Amazon or a platform like Ebay?
I don't think we'll ever sell products and have warehouses for them. That's not on the roadmap. But we're trying to be a platform that facilitates transactions between people and businesses.
How would that work?
For example, if this sweater I'm wearing is featured on Instagram by a retailer, you will be able to purchase it right on the site within a seamless checkout. This project is still at a very early stage, and we are conducting a very limited test in the US.
What's in it for you?
The business model for us is mostly advertising. The retailer who sells the sweater will hopefully decide to advertise more products to the consumer who ordered it.
Commerce and payments is an important area for us and the Libra project is a part of that. Many people all over the world have no access to financial services. The goal of Libra is to empower them with access to a safe, stable, and well-regulated cryptocurrency.
Apart from Libra, this area also includes everything from Instagram Shopping, which is going to help people connect to brands and emerging creators, to Facebook Marketplace, which is more consumer-to-consumer paying and buying and selling used goods. It also includes things like WhatsApp Business, which is more about connecting with small businesses.
There has been a lot of concern about privacy among users and marketers alike, especially after the Cambridge Analytica scandal. What can you do to allay these fears?
Safety, security and privacy are our highest priority now. Therefore we have taken a number of actions and put in more controls and transparency. For example, we have taken the General Data Protection Regulation (GDPR) from the EU and rolled it out globally.
We've also put users in control of how their data is being utilized. We are working on launching an additional tool that enables people to clear their off-Facebook activity. It will reduce Facebook's ability to utilize data coming in from other websites and apps.
Some might find this just a little hard to believe...
You can judge a company by where they make their investments. We are spending more money now on safety, security and privacy than our entire revenue was when we went public.
Facebook is a fundamentally different company now than it was two years ago. Every single product that we launch now has integrity, privacy, and safety all built in from the beginning. That's a fundamental cultural shift for the company.
The most important thing we do is building services for people. If we can delight them and give them the platform they are looking for, then businesses will follow. A little over two billion people a day use Facebook, Instagram, WhatsApp and Facebook Messenger.
So what services are you are building?
There are three major consumer trends that we reflect in our solutions: The first would be stories, because there has been a bit of a shift in how people like to share information. The story format disappears after 24 hours; it feels more lightweight than posts.
It also feels a bit more fun, because you can interact and use stickers. There is no pressure to have the perfect post. That started with consumers and now we're offering it to businesses.
What about videos?
Most communications are moving to video formats. People love it. The predictions say that close to 78 per cent of all mobile traffic will be video-based in the next few years. Therefore we are building video solutions for businesses, too.
And the third trend?
That would be messaging. People want to have more intimate communications with each other, within groups, but also, and increasingly, with businesses. So we're building solutions for people and businesses to communicate. For example, consumers can click on an ad on Facebook to start a Messenger thread.
Do you have anything specific for the fmcg industry?
Yes, with collaborative ads we help fmcg companies partner with retailers.
When one thinks about all the disruption in technology, how long will Facebook still be around?
We're very determined to build a business that is going to outlast any of us. And there are seven billion people in the world. We still have a lot of room to grow.