Welcome to Marketing BS, where I share a weekly article dismantling a little piece of the Marketing-Industrial Complex — and sometimes I offer simple ideas that actually work.
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Edward Nevraumont
Facebook and the First Amendment
In today’s newsletter, I will examine two fascinating speeches that were delivered within 24 hours of each other in mid-October. The first one, by Adidas’s global media director, shared information about marketing strategies in the digital age.
But let’s start with an analysis of the second speech: on October 17, Facebook CEO Mark Zuckerberg spoke at Georgetown University, sponsored by the McCourt School of Public Policy and its Institute of Politics and Public Service. With central themes of free speech and censorship, Zuckerberg spoke for more than thirty minutes to an audience comprised mostly of students.
Whether you generally agree or disagree with Zuckerberg’s views and actions, I highly recommend watching or reading the speech (full video here and transcript here).
Zuckerberg defended the importance of free speech in the 21st century. By celebrating Americans ideals, he attempted to tie the halo of freedom of expression to Facebook (which could definitely use a halo right now).
I found many of Zuckerberg’s comments worth quoting, but I have selected the passages that I believe best convey his core ideas:
Movements like #BlackLivesMatter and #MeToo went viral on Facebook — the hashtag #BlackLivesMatter was actually first used on Facebook — and this just wouldn’t have been possible in the same way before. 100 years back, many of the stories people have shared would have been against the law to even write down. And without the internet giving people the power to share them directly, they certainly wouldn’t have reached as many people. With Facebook, more than 2 billion people now have a greater opportunity to express themselves and help others.
Zuckerberg continued, linking Facebook to the history of civil rights in America:
We want the progress that comes from free expression, but not the tension. We saw this when Martin Luther King Jr. wrote his famous letter from Birmingham Jail, where he was unconstitutionally jailed for protesting peacefully. We saw this in the efforts to shut down campus protests against the Vietnam War. We saw this way back when America was deeply polarized about its role in World War I, and the Supreme Court ruled that socialist leader Eugene Debs could be imprisoned for making an anti-war speech. In the end, all of these decisions were wrong. [Emphasis mine]
Of course, issues surrounding free speech are rarely cut and dried. Zuckerberg notes that the First Amendment does not apply to private companies. As such, Facebook can freely choose to censor any kind of content from their platform. And they do choose to restrict some things — he provided examples including “terrorist propaganda, bullying young people ... as well as content like pornography that would make people uncomfortable.”
But then comes the tricky part of Facebook’s decision to prohibit some material — “once we’re taking this content down, the question is: where do you draw the line?”
After posing this question, Zuckerberg explained the operational challenges of identifying dangerous content. At the same time, he made the case that breaking up Facebook would worsen — rather than alleviate — problems with dangerous online content.
During Zuckerberg’s self-evaluation of Facebook’s effectiveness at screening online material, he explained why they draw a line, as well as why Facebook does not remove certain types of content. Here’s how Zuckerberg described the complexity of tackling issues like “fake news”:
Take misinformation. No one tells us they want to see misinformation. That’s why we work with independent fact checkers to stop hoaxes that are going viral from spreading. But misinformation is a pretty broad category. A lot of people like satire, which isn’t necessarily true. A lot of people talk about their experiences through stories that may be exaggerated or have inaccuracies, but speak to a deeper truth in their lived experience. We need to be careful about restricting that. Even when there is a common set of facts, different media outlets tell very different stories emphasizing different angles. There’s a lot of nuance here. And while I worry about an erosion of truth, I don’t think most people want to live in a world where you can only post things that tech companies judge to be 100% true.
Zuckerberg’s speech featured a lot of rhetoric about the value of free speech, but it also included some specific tactics used for the real-world application of filtering “dangerous content” and “misinformation.” Here is my summary of how Facebook plans to deal with these issues:
Build strong AI systems and supplement with human employees (35,000 of them). Develop ways to identify and remove harmful content.
Focus on the people, not the words. Block and remove fake accounts so that only “real” people are posting and commenting.
Let people decide for themselves what is true and what is not.
Err on the side of NOT censoring content. In the case of politicians, allow them to say (just about) whatever they want; individuals should judge the accuracy of their comments.
If Zuck’s Wearing a Tie, You Know it’s Serious
How did pundits respond to Mark Zuckerberg’s speech at Georgetown? Generally speaking, the reviews have been negative. In his Ad Contrarian newsletter, Bob Hoffman wrote the following:
If Facebook is not required by law to publish material, we are left with the fact that Facebook chooses to publish material they know is false. … Facebook's culture is still one of irresponsible adolescents who refuse to grow up. They want the privileges of adulthood without the responsibilities of adulthood.
In Tim Egan’s New York Times opinion piece, he called the speech “a profile in cowardice.”
But as Ben Thompson explained at Stratechery, condemnations of Facebook often rely on contradictory logic. Thompson supported his idea by listing three common ways that analysts and politicians criticize Facebook:
The first and most straightforward way is Facebook putting its thumb on the scale… an argument the company is simply too large. The second concern is the capacity of trolls, both of the profit-seeking and foreign government variety, to leverage Facebook’s fundamental engagement-seeking nature to push misinformation and division.... The third concern is what has dominated the news cycle as of late: Facebook’s decision to not fact-check any posts or ads from politicians…. The broader issue is that the third concern and first concern are so clearly in direct opposition to each other. If Facebook has the potential for immense influence on politics, why on earth would anyone want the company policing political speech?
“Why on earth would anyone want Facebook policing political speech?” Because many people support Facebook’s ability to restrict speech — as long it’s only limiting the speech of their political opponents. In America, people on the political right are mad because they believe Facebook censors their speech. The political left, in contrast, is mad because they believe Facebook doesn’t censor the right’s speech enough.
In the big picture, any time an organizational body (business, government, school, etc.) decides to censor content, they will encounter criticism. Wherever a line is drawn, some people will believe the restrictions went too far and other people will argue the censorship didn’t go far enough. Without question, Facebook is being squeezed between a rock and a hard place.
The bipartisan attacks on Facebook were clear last week, when Zuckerberg appeared in front of a Congressional hearing. Ostensibly, he was summoned to answer questions about Facebook Libra, but more than 50 members of Congress used the opportunity to grill Zuckerberg — for more than six hours — on topics as varied as discrimination, civil rights, diversity, elections, monopolies, terrorism, content moderation, child abuse and more.
Rep. Alexandria Ocasio-Cortez (D-N.Y.) won the highlight reel with this exchange:
AOC: “Can I target ads against Republicans in primaries saying that they voted for the Green New Deal?” Zuckerburg: “I don’t know the answer to that off the top of my head. I think, probably.” AOC: “Do you see a potential problem with a lack of fact-checking on political advertisements?” Zuckerburg: “I think lying is bad, and if you ran an ad with a lie, that would be bad.”
Zuckerberg took heat for his answer, but let’s stop to consider Facebook’s status within the broader media landscape. AOC could run that exact same advertisement on television without encountering any problems. Essentially, then, she is suggesting Facebook should have to include a type of “fact-check filter” that’s not currently imposed on ABC, CBS, NBC, or any other network.
The notion that Facebook should police all political content can lead to some complicated decision making for the company. For instance, during the recent congressional hearing, Rep. Bill Posey (R-FL) pressed Zuckerberg over Facebook’s censorship of material that promoted anti-vaccination perspectives. On one hand, restricting Posey’s posts (some of which circulated anti-vaxxer conspiracies) violated Facebook’s stated policy of allowing politicians to freely express themselves. On the other hand, one of the few subjects where Facebook agrees to “restrict speech” involves any “misinformation that could potentially lead to imminent harm… especially misleading health information.” In this example, therefore, Facebook is damned if they do, and damned if they don’t.
To be clear: I believe that Facebook (and Zuckerberg, in particular) wields far too much power over a significant communication channel. As such, I don’t see the logic in trying to combat “misinformation” by giving Facebook (or government officials overseeing Facebook) access to even more power.
Any “solution” to Facebook will not only require sophisticated technical systems, but also careful consideration of the unintended consequences. Unfortunately, few people are engaging in thoughtful conversations about the philosophical challenges. Instead, our civil discourse has been reduced to watching Zuckerberg get roasted for not doing enough and for doing too much. As I have written before, once a company finds itself in the “bad box,” they struggle to escape.
Bad Companies
Social media is a “new” technology. People are generally distrustful of new technologies, particularly new media technologies. Believe it or not, but a few hundred years ago, many people believed that young people would suffer — cognitively and morally — by reading novels. You are probably familiar with this line of thinking as applied to pop music, television, and video games (for a great deep dive into this history, check out Everything Bad is Good for You). Today, you can read countless thinkpieces about the dangers of “screen time” and social media. Preliminary evidence suggests that fears about screens and social media might be as overstated as the idea that television rotted children’s brains. Zuckerberg actually touched on this theme during his speech at Georgetown, as he refuted the commonly held belief that social media platforms are responsible for polarizing voters (his assertion is supported by academic research). In Zuckerberg’s words:
The most polarized voters in the last presidential election were the people least likely to use the internet. Research from the Reuters Institute also shows people who get their news online actually have a much more diverse media diet than people who don’t, and they’re exposed to a broader range of viewpoints. This is because most people watch only a couple of cable news stations or read only a couple of newspapers, but even if most of your friends online have similar views, you usually have some that are different, and you get exposed to different perspectives through them.
I don’t expect these facts will change anyone’s opinion about Facebook and social media, but good on Zuckerberg for trying, I guess.
When people claim that Facebook is wreaking significant damage to our society, they often conflate two ideas: that Facebook is (1) evil and also (2) effective. No one worries about villainy when it’s locked away in solitary confinement. People express concern about Facebook because they not only believe the company is harmful, but they also think it’s effective at causing harm on a larger scale.
If a media channel can effectively persuade people to change their beliefs, then it provides an opportunity for marketers. Moreover, when there is an irrational belief that a media channel is extremely effective at changing beliefs, then it becomes an irrationally exuberant channel for marketers. Which is exactly what happened with Facebook.
The Social Media Strategy
In a few previous posts, I have referenced Nike; today, I will focus on the second-largest sportswear company in the world — Adidas. In March 2015, they unveiled a new strategy, centred around the idea of “co-creation” with their customers. Moreover, they announced an ambitious goal: growing their e-commerce business by 5x before 2020 (bringing the annual figure to $2 billion). By September 2016, Adidas refined their strategy, by declaring an emphasis on digital marketing channels. David Greenfield, their global head of digital experiences, dropped this great soundbite:
If we look at our recent marketing activity for the NMD brand it was 100% on social. It wasn’t a 30-second TV spot or some slogan but a digital-only strategy that made us sell out of those shoes in a matter of hours. Of course TV still has a place but the fax machine still has a place too and I’m not about to create a fax machine marketing strategy. Digital is the most relevant channel for our audience. [Emphasis mine]
Greenfield convinced CEO Kasper Rorsted about the value of digital marketing. By March 2017, Adidas pulled out of television advertising entirely. As Rorsted noted:
“It’s clear that the younger consumer engages with us predominately over the mobile device. … Digital engagement is key for us; you don’t see any TV advertising anymore.”
On October 16 — just one day before Mark Zuckerberg’s Georgetown address — Simon Peel, Adidas’ global media director, spoke at EffWeek. Although most people in the marketing industry spent time digesting Zuckerberg’s comments about freedom of expression, Peel’s speech might have provided even more valuable comments about digital advertising.
Peel verified that Adidas had shifted their marketing budget to digital channels, spending 77% of their marketing budget on “performance advertising” like paid search and Facebook. His conclusions were especially fascinating:
...brand advertising drives the majority of Adidas sales across wholesale, retail and ecommerce. Adidas has been too overly focused on digital attribution… partly as a result of the ability to look at short-term measurements in real time. But when you look at econometric modelling it's telling you something very different. It's telling you that you should be investing in video, which doesn't do very well in last click attribution, that you should be investing in TV, that out of home and cinema is driving ecommerce sales."
Peel continued to share insight about their application of econometric modelling:
One of the other things we saw from the econometric modelling was that our individual business units were not driving their own business unit sales. … So although we believed that football [advertising] was going to drive football sales, actually it wasn't; football was driving running sales, running was driving Originals, Originals was driving training.
Sometime over the last two years, Adidas realized that the shiny new object of digital marketing on Google and Facebook might not be as magical as they originally believed. Instead, traditional “mass” marketing was the true driver of their business. Adidas even figured out a concept I explained in “Starbucks and Loyalty Programs”; as described in Marketing Week, Adidas “thought loyal customers were driving sales, and it was therefore investing in CRM, in fact 60% of revenue came from first-time buyers.”
End-of-the-funnel marketing channels are easy to track and drive short-term performance. When those tools are combined with the rhetoric about Facebook’s game-changing impact, you can understand why some companies abandon the tried-and-true strategies that have worked for a hundred years.
Scale Matters
Media outlets, both traditional and modern, have been particularly hard on Facebook — criticism which has harmed the social network’s bottom line. As critics pile on with increasingly scathing comments, some members of the media seem empowered to propose audacious courses of action.
On October 24, CNN President Jeff Zucker appeared on stage for a panel during the Citizen by CNN conference. In a casual tone, Zucker offered this opinion:
Think about the mental gymnastics needed to rationalize this comment. When Zucker suggested that Facebook should be penalized for their approach to political advertising in 2016, he neglected to mention one important fact. During both the Republican primaries and the subsequent general election, CNN provided significantly more FREE coverage to Donald Trump than Facebook delivered via its marketplace of ads.
So how can we reconcile the perceived impact of Facebook with the reality?
Let’s start with Nate Silver, who offers some interesting points:
Many people blame (or congratulate) Facebook for the election of President Donald Trump. But for that theory to hold true, the $44 million Trump spent on Facebook (plus the almost insignificant $1.25 million per month that Russia was estimated to be spending), would need to have delivered 100x more efficient results than the value of Trump’s television and radio coverage.
If we remember the lessons from Adidas’s experience, we should know that there’s no way Facebook advertising provided such legendary results.
Whatever the cause of Trump’s victory, Facebook was not a significant driver — no matter what our fears lead us to believe.
Let’s be clear: we should not tolerate Russia’s influencing of American elections. In the big picture, though, any impact of their Facebook-specific spending is unlikely to have moved the needle.
Furthermore, the reality that Facebook is not an effective brainwashing platform does not mean that the criticism haunting the company isn’t real. Zuckerberg himself acknowledged this point during his Georgetown address:
I’ve considered whether we should stop allowing them [political advertisements] altogether. From a business perspective, the controversy certainly isn’t worth the small part of our business they make up…
By small, he means really small. Techcrunch estimates that political advertisements on Facebook in 2018 drove only 0.5% of Facebook’s revenue (even in the 2016 election year, the figure was only as high as 0.66%). Whatever Mark Zuckerberg’s motivation for holding the course on political advertisements, it certainly isn’t for the money. Maybe we should take him for his word that he does not want to be the arbiter of truth. Perhaps he really would like people to decide for themselves whether or not they believe a politician — it seems to work fine that way on television.
Final thought for the day: don’t let your company get distracted by new shiny objects. Focus on long-term investments that will be impactful in the long term.
Keep it simple,
Edward
If you enjoyed this article, I invite you to subscribe to Marketing BS — the weekly newsletters feature bonus content, including follow-ups from the previous week, commentary on topical marketing news, and information about unlisted career opportunities.
Edward Nevraumont is a Senior Advisor with Warburg Pincus. The former CMO of General Assembly and A Place for Mom, Edward previously worked at Expedia and McKinsey & Company. For more information, including details about his latest book, check out Marketing BS.
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