Recent disclosures by Facebook and Twitter about the volume advertising purchased by Russian representatives during the 2016 presidential campaign has raised some serious questions about these platforms.
There are no simple answers, but if you use these platforms to promote your business (and many of us do) being informed will help you be prepared as things change. So what are the big questions?
Question #1 – Are they social networks or advertising platforms?
Facebook is a social community right? Well, yes and no. Sure we use it to connect with friends, family members, and potential customers, but that is not how they make their money. Their revenue is driven by advertising. Just look at this slide from their recent earnings call. About 98% of their revenue comes from advertising. The percentage is similar for Twitter and Google.
Question #2 Should social media advertising platforms be regulated?
If the majority of revenue comes from advertising, should they be subject to the same regulations as other advertising platforms? Television, radio, and print media are all regulated by the FTC, but social platforms aren’t. When you consider that Facebook makes more money from advertising than companies like CBS, Comcast, or Disney, regulators may be rethinking their hands-off approach.
One of the challenges with regulating this industry is that given the average age of members of Congress, there are probably very few who really understand these platforms. And while legislators consider some type of regulation, Facebook, Twitter, and Google are lobbying hard to self-regulate. But can they control the monster they have created?
Question #3 – Are Facebook, Twitter and Google capable of monitoring and managing what they have built?
This may seem like a silly question, but given the rapid rate of growth of these platforms, watching some of the things which have happened recently makes we wonder if they are really prepared to manage what they have built. In Facebook’s 3rd quarter earnings call, Mark Zuckerberg expressed concern over how their platform was being used. With his remarks he attempted to convey a level of confidence that they had the ability to get things under control.
You can listen to an excerpt below or the entire one-hour call, here.
While Facebook is confident, it seems Congress is not. Senator Al Franken drove this point home during his questioning of the lead attorney at Facebook. Political ads paid for with Russian Rubles should have sent off some type of warning signal, but it didn’t. The best Facebook could say was that they should have noticed and will do better next time. As you can see from the video, the senator was not impressed.
With so many contentious issues it may be awhile before we see legislation regulating social media advertising, but I am pretty sure it will happen eventually. In the meantime, these tools provide a lot of opportunity for small business owners. Discover how you can use them to grow your business today.