Social media giant, Facebook, Inc. Common Stock (NASDAQ:FB) has been waging in a scandal involving data leakage but many advertisers are not planning to cut their budget. This is according to a conversation with seven of Facebook’s employees and who are actively involved in media and advertising industry. Many of these people requested to remain anonymous because they are not allowed to disclose their relationship with the company.
Adverting companies and agencies have been keenly following the events and many are worried about the social network which seem be moving from one controversy to the other over the past one year. Some of the major scandals that have rocked the company are acting as an avenue for Russia to interfere with the 2016 US election and many cases of misreporting important advertising metrics.
According to one source, the Cambridge Analytica scandal was just one the major situation that Facebook is grappling with. Although that alone may not be so much concerning, everything put together is making the social media company lose the field to digital advertising competitors.
Many companies are looking for two possible steps to take in the wake of the Cambridge Analytica fiasco- whether the scandal will spark off a massive user exodus and whether the tighter and stricter data safeguard that Facebook is planning will put a limit on the advertisers’ ability to effectively target users. According to Parker Ray, a chief digital strategist at agency MWWPR, Facebook will only start attracting advertisers if the changes that it is proposing make a strong impart by protecting brands’ data from being consumed.
The New York Times and The Guardian on Saturday reported that Cambridge Analytica, a data analytics firm which ran President Donald Trump’s campaign, used in appropriately obtained personal information of 50 million Facebook users so as to target potential voters during the 2016 U.S presidential election. The information in question came from a psychology quiz app which was developed by Aleksandr Kogan, who had told Facebook that he wanted to use it in a research but ended up selling to a third parties.
Facebook says it learnt of the data leak in 2015 and had asked Cambridge Analytica to delete the data. The later said it has deleted the data and that it was not used in election. In his defense, Kogan said he had informed Facebook beforehand that the information could be used by a third party and for other purposes including selling it.