April 26, 2018

This piece is presented by Click Rain.

By Amanda Chaon, senior digital media strategist

It’s hard to believe how much Facebook has transformed the way we communicate with friends, family, businesses and community groups since its launch in 2004. This period has been marked by near-constant algorithm updates and enormous growth for the social platform, which claims $39.9 billion in global advertising revenue. The average user spends 35 minutes per day on Facebook, and that has been a golden opportunity for brands and companies to reach their core audience segments.

Still, very few of us were aware of how much we were giving the social network with all of those likes, comments and clicks. Social ad targeting relied on this data, but many users were not aware their consumer privacy was at stake before this topic became headline news. As Facebook and other data companies have come under increasing pressure to account for their practices, there are some major changes on the horizon for digital advertisers.

Recent privacy concerns highlight Facebook challenges

Facebook has been through a lot of changes lately, and these changes, both external and internal, are having a direct impact on what users see and share on the platform and how brands are able to advertise.

Cambridge Analytica investigation

Facebook was in the spotlight in April as Mark Zuckerberg, CEO and founder, testified to Congress on the platform’s consumer data privacy enforcement after allegedly allowing Cambridge Analytica, a British political consulting firm, to access personal data on Facebook users for political campaigns. The investigation and additional press have made consumer privacy a hot topic and one that many users want more personal control over.

GDPR

The General Data Protection Regulation, or GDPR, is a European Union-based regulation that goes into effect May 25. Essentially, it is calling on companies that store and use consumers’ data to give more control back to the consumers on how it is being used and protected. Though the law is based in the EU, it covers any EU citizen’s data, regardless of where it is stored, giving the GDPR a global impact on how companies handle data and privacy concerns. In other words, this regulation is pushing U.S.-based companies to think more about how they are protecting consumer data and urging them to be more transparent with consumers when they are using it.

Facebook’s algorithm change

Though unrelated to privacy issues, Facebook made a change to the news feed algorithm earlier this year to give higher precedence to posts made by friends and connections than by business pages — even if the user “liked” them. This has led to an increase in brands paying to have their content seen by users. With concerns over ad targeting, paying for these impressions is also in question.

How will all of these factors impact local businesses?

While one of these factors alone might not make a huge impact, all of them together may shift advertising targeting options. One of the biggest changes is providing more control to users on what data is used for advertising purposes. These changes will be rolled out to European users in May and then globally throughout the year.

Facebook will begin asking users for permission to use their personal data to power some of the platform’s features, including facial recognition and forms of targeted advertising. There also will be a prompt for users if they would like to see targeted ads based on political, religious and relationship details they have shared on profiles or from data collected by some of Facebook’s external partners.

Though Facebook now is offering a way for consumers to turn off targeted ads based on information, the company has not released plans to allow consumers to opt out of it collecting data about users — something that will be watched closely in regards to the GDPR.

Not only will users be able to opt out of seeing targeted ads, but also targeting options will be reduced. Third-party data targeting will be phased out throughout the year. Examples include those who are in the market for a new home or car or household-income information. As algorithm changes have shrunk space for companies in the news feed, CPM prices have increased in response to the competition. On average, Facebook CPMs increased 37 percent from Q3 2017 to Q4 2017. Facebook’s tightened targeting capabilities will create less opportunity for advertisers and possibly more demand as inventory and prices come at a premium.

Overall, it’s fair to say that recent privacy concerns have jolted the industry. While the digital media landscape has always been fluid and ever-changing, the weight of upcoming changes will affect brands a bit more than what they’ve experienced in the past. When thinking about media strategy for this year and 2019, it will be important to understand how these changes could affect performance for Facebook, a platform that has historically been unbeatable.

More attention will need to be paid to Facebook ad metrics: Are these people engaging with the ad or taking the desired action? Do media dollars need to shift to begin incorporating more or different digital platforms? How has the cost per acquisition changed?

One thing is true: Whatever you were doing last year in regard to digital advertising likely will need a face-lift in the months to come. Campaign performance likely will be impacted if you aren’t making nimble changes to keep up with an evolving landscape.