Facebook

What Everyone Missed About Facebook

There are any number of conclusions one might draw after watching the Facebook hearings on Capitol Hill last week.

  • That most of our elected officials don’t have any clue how Facebook, much less the platform business models that have powered so much innovation across industry segments for thousands of years, work.
  • That Mark Zuckerberg showed remarkable restraint in the face of being asked, repeatedly, over the course of two days and 10 hours, questions that highlighted that lack of understanding. (That trait also probably makes him a great dad.)
  • That whoever decided to limit lawmaker monologues/questions to four minutes each should be given the Congressional Medal of Honor. Anyone who gets it down to one minute should definitely get the Nobel Peace Prize.
  • That putting what is now the inevitable regulatory screws to social media platforms will impose unwieldly compliance costs on every player, making it harder for new players to emerge and scale, and thereby strengthening Facebook’s position.
  • That lawmakers have now put any big tech company that uses consumer data in the same bucket: bad guys out to make billions of bucks at the consumer’s expense.

It’s that last point though — one now central to the current Facebook data debate — that I find most unsettling.

Not because players such as Facebook, who’ve allowed unauthorized access to consumer data and generally haven’t been very careful with consumer data, shouldn’t pay the price for what they did — they should, and Facebook will. That’s what the Federal Trade Commission’s Consumer Protection division is there for, not to mention class action lawyers, as well as similar regulatory authorities in other countries.

And not because everyone who touches the consumer shouldn’t consider data privacy and security part of the deal they must have with their consumers if they want those consumers — their crown jewels — to keep coming back.

But unsettling because it fails to consider the fact that platforms differ a lot in how they get and use data. They aren’t all like Facebook.

In particular, the one-size-fits-all approach lawmakers seem to be taking ignores consumer intent when using these platforms, how that intent varies across the platforms with which they interact and how that intent shapes the expectations that consumers have of those platforms.

And, most important perhaps, what data is — or isn’t — needed to close the loop on that intent.

It’s also a core tenant that I outlined in my January 2018 annual opus on trends that will drive the payments and commerce ecosystem dynamics this year and in the years to come.

I said then that the payments and commerce power brokers of 2018 and beyond understand how to use context to monetize consumer intent without compromising their trust, their data and therefore their expectations of the platforms when using them. It’s why I said then that Google Search and Amazon and platforms like them — not Facebook — are among the new power brokers in our world.

And now why it’s important not to throw all of the platform data babies out with the congressional big tech regulatory bathwater.

 

The Evolution of the Ad Platform

Not even 20 years ago, before digital, mobile and the always-on world in which we all live today, there were newspapers and television.

People would read the daily newspaper to digest the comings and goings in the world. On those content-filled pages were advertisements hoping to catch the consumer’s eye, build a brand and influence a purchase.

Those same people would also sit in front of the television to watch their favorite shows. About every seven or so minutes, there was a commercial break in which ads were inserted with the same ambition — build a brand and drive a buy.

Consumers read the newspaper and watched TV not for the advertisements, but for the content. Ads went along for the ride.

Really, really good ads made it seem as though the brand was talking directly to the consumer — even though the best those brands could hope for was that people watching “L.A. Law” or “CSI” or reading The Boston Globe or The Wall Street Journal all more or less liked the same things. That meant neither the brands nor the publishers nor the networks knew a lick about whether those ads directly drove a purchase; thus the famous adage about not knowing which 50 percent of advertising really worked. But they all recognized that it was the best way then to reach a massive number of eyeballs.

The ads also served another very important purpose: They brought the consumer eyeballs for the advertisers and the right type of content brought the right eyeballs (daytime soaps for stay-at-home moms, financial news for business people).

That business model and platform dynamic made it possible for consumers to watch network TV for free and buy the paper for $0.25 or $0.50 — all because advertisers paid tens and even hundreds of thousands of dollars to be in front of their eyeballs.

Before digital and mobile and online stores, there were physical stores and shopping malls — and both were among the only ways consumers could find the things they wanted to buy.

Moms packed up the kids and drove to the store to browse and to buy. Coupons or sale circulars or signage in the store promoted items on sale or storewide discounts. Those ads were presented in the context of a conscious decision on the part of that mother to make a purchase in those stores.

It made perfect sense: Where there is intent to buy in an environment that the consumer knows and trusts, presenting an ad to a consumer increases the likelihood that a sale will be made.

 

Awash in Digital Exhaust

Our all-digital, all-mobile, always-on world is rife with new, digital intermediaries that all want to attract consumer eyeballs to monetize the digital exhaust their interactions leave behind.

There’s a lot of digital exhaust.

In July 2017, business data enabler Domo reported that 2.5 quintillion bytes of data is produced every minute worldwide. “Data as the new oil” has galvanized company executives, their advisors, boards and investors around using tools and new technologies to find and monetize those proverbial gushers. The pitch and the panacea for every business without a source of revenue to sustain it is to acquire consumers so the data generated by their interactions on those platforms will turn into revenue “down the road.”

But all digital, all mobile, always on doesn’t change the consumer’s intent nor their expectations of the platforms with which they engage when they do.

 

The Intent to Share, Not to Be Shared

Take Facebook.

Facebook’s MO almost from the start was to assemble a critical mass of eyeballs to their platform that they could use to attract and monetize advertisers that wanted to buy access to those eyeballs. Becoming a Facebook user meant completing a profile that gave Facebook insight into that individual user: their name, email address, phone number, age, gender, school, employer, title, marital status — among other things. That profile data was enriched as the user’s social network grew, users clicked the “Like” button, commented on posts and shared content. Users checking in with their friends on their News Feeds saw ads for brands that correlated to those likes and the interests of those users — more targeted — but in very much the same way that they would see ads in other content feeds like newspapers or TV.

It was in many ways just like any other ad-supported content platform.

Until it wasn’t.

The goal to monetize user eyeballs by selling advertiser access to them ended up swamping the user-generated content that Facebook users wanted to see with too many ads that they didn’t. Updates from friends and their shared content became too hard to find in between sponsored content, ads and, later, “fake news.” Brands once enamored with the notion of highly targeted ad buys found they were missing out on big swaths of users who were also qualified buyers — and switched tactics.

What consumers didn’t count on, since it wasn’t their intent when signing up for Facebook initially or using it on an ongoing basis, was being part of a platform that would take their most personal data — their name, email, age, gender, marital status, sexual preferences, employer, position, likes, address, school and phone number — and make it accessible to third parties without their permission off the Facebook platform. And have those third parties, in turn, serve them content without their permission. And do bad stuff with their data.

They also didn’t sign up to being tracked via the use of cookies when they weren’t logged into the platform. Nor did most users have any idea how much of their personal data was being shared when using Facebook Connect to log into other sites.

Over the years, Facebook has adjusted its policies and practices to stop some of the bad behaviors that compromised user data without their knowledge, including limiting third-party access to a user’s social network and adjusting its News Feed algorithms to prioritize user-generated content over ads.

The Cambridge Analytica data scandal that has dominated the headlines only raised the decibel level over why and how the user data of not just 87 million people — but quite possibly all 2 billion users — has been compromised in a way that gives access to that data and those users without any implied or express permission to do so.

It seemed that not only did Facebook turn a blind eye to the behaviors of these bad actors but turned a blind eye to the consumer’s intent in using Facebook: to share content with friends, to see what content their friends have shared and be served ads and content relevant to their interests, just like any other ad-supported content platform would.

Not to be targeted by third parties who accessed their data without their knowledge or permission.

And not, it seems, to enable commerce.

Research that we will be releasing shortly suggests that for as much as brands may think of Facebook and the News Feed as a natural for enabling “contextual commerce” on the Facebook platform, there is an inverse relationship between the frequency, spend and satisfaction with a contextual commerce experience and the use of Facebook as a platform for that type of commerce engagement.

 

The Intent to Buy

That’s not the case with Google Search.

Consumers make 40,000 searches every second on Google Search for a total of more than 3.5 billion searches a day or some 1.2 trillion searches a year. Those searches are prompted by a consumer’s interest in discovering the answer to something: When are federal taxes due? Why has the weather been so crappy for the Boston Marathon for the last 10 years? Will it ever be spring in the Northeast?

And, increasingly, where do I buy [fill in the blank]?

Asking Google Search demonstrates an intent to buy — and the consumer’s expectation that they’ll get a response in a millisecond with options for where to do that. They know that they’ll be presented with many of them, including some placed at the top of the search page paid for by brands or retailers to appear there when a searcher uses those keywords. It’s then up to the consumer to decide whether — or if — to click through and make a purchase.

Google Search uses consumer intent — a search for a product to buy — to match that consumer with a range of places she can go to complete the purchase. Google knows where that consumer is but not her name or any personally identifiable information, nor does it have to in order to deliver a list of relevant places and options for her to buy. If a consumer punches through to a merchant that has enabled Google Pay or form fill via Chrome, those credentials can be used with the user’s permission to expedite checkout there. Consumers can also bypass that step, register with a merchant, use a card on file or any other checkout option presented to them.

Think how different this is from Facebook.

A consumer intends to use her News Feed to find out what her friends are up to, or maybe learn some news, not to buy a product. A consumer searches when they’re actually interested in something, and when that looks like it is related to a product, Google serves an ad. Most search pages don’t have ads for non-product-related searches. The Facebook News Feed, on the other hand, always shows ads.

Take Amazon.

When a consumer goes to Amazon to buy something, she’ll also be presented with a list of products to buy, including sponsored posts, recommendations on what to buy with that product and product reviews based on what she types into the search bar. If that consumer is an Amazon customer, she’ll probably also see details about whether it was a product she had purchased before and be given the ability to make that purchase in one click and/or to add it to her Dash buttons for replenishment if appropriate.

Amazon uses that consumer intent — a search for a product to buy — to match that consumer with products and marketplace sellers, so that she can complete that purchase on Amazon. The company provides its sellers with the opportunity to make a sale on its platform for a product they can fulfill but doesn’t share customer data with those sellers — a position that’s been a lightning rod between Amazon and retailers for years. Since Amazon is in the selling business, it has a real incentive to make sure people are happy with what they buy.

That’s pretty different from Facebook too.

If a user clicks on a Facebook ad and buys the product, since Facebook isn’t a commerce platform, they probably won’t blame Facebook if the product is poor. If a consumer clicks on and buys something from Amazon and they don’t like it or it breaks, they’ll blame Amazon.

And yes, I know that in both situations, there’s another data conversation related to the ability of the merchant or retailer’s access to and use of customer data, but let’s save that for another column on another day.

 

The Intent to Share — And Be Shared

There are many other platforms that are in the business of monetizing consumer intent — all related to why the consumer seeks out and uses that platform.

Two made news last week.

Uber announced that its app will soon become a transportation hub for consumers.

Within the Uber app, in addition to finding a ride using Uber, consumers will be able to find and book mobile tickets for local public transportation, rent a bike through the ridesharing company’s recent JUMP acquisition and find someone willing to rent their car to them for an hour or a day. The consumer intent is to make getting around town easy and convenient.

This new offering is on top of the delivery services provided by Uber Eats — the $10 billion Uber business that uses location data and Uber account credentials to make it efficient for users to order food from local restaurants and have it paid for and delivered via the Uber app.

All users had to do to take advantage of those services was establish a profile that included only a few pieces of information — name, email and payments credentials. Uber uses those credentials to enable the “Uber experience” when completing a ride, but the most important piece of information that they need is their location and that of the driver. The rest simply makes it easier for that consumer intent to be actioned inside the app — without being served ads that get in the way of that service experience.

Zillow also made news last week when it announced that it would leverage its reputation as a trusted provider of data on home values and its platform that brings a massive number of eyeballs to people who want to sell their houses to launch a house-flipping business. The market didn’t like it much: Zillow’s stock dropped 9 percent on the news, fearing channel conflicts with realtors whose content populates its pages.

Yet it’s another way for Zillow to monetize a consumer’s intent to find and buy a house by offering a convenient option to sell the one they own now.

 

The Intent of Intent

The late Supreme Court Justice Thurgood Marshall once wrote: “What is the quality of your intent?” It was a rhetorical question with its own intent — to flag the difference between what someone might say and the intentions, as he wrote, behind those words. Intent, he said, always surfaces — the good and the bad.

It’s an appropriate analogy for the consumer data debate that started last week and the one that will rage in the weeks, months and years to come. The consumer’s intent when interacting with the physical and digital platforms they use seems clear — even when the intent of the platforms they engage with isn’t.

It’s time to close that gap.

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