Facebook’s no good, very bad week

Revisiting the trouble with platforms and their monopoly on advertising

Facebook has had an eventful week. First, there was the whistleblower interview that aired on “60 Minutes” on broadcast TV on Sunday. A multi-hour global service outage on Monday cost the company as much as $79 million in advertising revenue while simultaneously exposing just to what extent Facebook’s various services have become critical infrastructure around the world. Then came the whistleblower’s congressional testimony, and regulatory action is certainly in the cards in several jurisdictions. What a mess. 

Yet, on the other side of this in advertiser land, it’s business as usual. As Garett Sloane reported for AdAge, brands don’t think they have much – if any – agency here:  

“I don't even think a boycott does anything," said one media buyer. "They are so big and so much of their money comes from small and local advertisers. I think it is better for national brands to work with Facebook to help them solve these issues."

This learned helplessness isn’t without merit: While there’s no shortage of big spenders on the platform, the key to Facebook’s advertising business is the millions of smaller businesses that run ads on the platform every day. Even if a gaggle of high-profile, big-budget brands paused their spending – as they last did in June 2020 – not much will commercially happen to Facebook’s top line. In any case, these types of advertiser boycotts don’t last long because of a fundamental challenge in advertising today: 

If you don’t spend your budget on Facebook, where would you spend it instead? 

All of a sudden having, say, a seven-figure monthly budget back in your media plan might sound like a boon, but deploying it effectively is a different story. The first hurdle may be your very own marketing team: Do your core people have enough experience with non-platform (read: non-Facebook) channels to be able to craft an effective multichannel strategy? To put it more directly, does your head of marketing know how to buy TV ads? 

Then come some practical supply-and-demand challenges. Diverting ad dollars to a different platform may not deliver the results you’re hoping for, and even if inventory were readily available, your measurement and attribution models would, at the very least, need to be revisited. Diverting to traditional channels may seem like a good stop-gap (Hi, splashy Superbowl ad!), but the same question of overall effectiveness stands. The open internet is always an option for digital budgets, but the rapid deployment of sizable budgets is complicated by questions of brand safety, measurement, and ensuring that your ads aren’t running on low-quality properties. This is beginning to sound like the plot of “Brewster’s Millions,” in which Richard Pryor stands to inherit a great fortune if he can only find a way to spend $30 million in 30 days. (This seems to have been a considerably more difficult challenge in 1985 when the film was released than it would be today, but you get the idea.) 

To reimagine how to reallocate media dollars once destined for Facebook, let’s revisit this recommendation framework we created during  the previous Most Recent Big Facebook Boycott, circa June 2020. There are immediate considerations for every ecosystem player that interacts with platforms today. Let’s try this in a choose-your-own-adventure style. 

Brands and marketers: 

To ensure that they don’t simply return to  the status quo after the next boycott, brands and marketers should focus on:

  • Data strategy and an infrastructure of their own: There’s been much talk about the importance of first-party data, and while brands’ awareness has rapidly increased, all too often the implementation details aren’t considered mission critical to the business. Data strategies often remain in the realm of programmatic execution only, and even the most data mature companies struggle with organizational silos and technology tools that only suit a subset of the use cases they need. The only way out of this is to build internal capabilities and make data strategy a corporate priority.  

  • Tech and advertising stack audits: Ad tech evolves quite quickly, and vendor and partner selections made just 18 months ago may make a lot less sense today than they did then. Given that the average annual cost of a SaaS license is easily six figures, pruning the partner tree may result in an immediate balance sheet improvement and a more streamlined workflow. 

  • Independent insights and double-checking platforms’ homework: We’ve lost count of how many reporting scandals can be attributed to a single platform. (Hello, FB removing 2 billion-plus fake accounts.) In most other media channels, measurement is a separate discipline that provides the necessary checks and balances, however flimsy these may appear to be. In platform land, we really don’t have any other option but to believe the numbers the platforms give us. This inherently presents a conflict of interest. 

Media owners:

Media owners tend to approach platforms symbiotically: as a way to distribute more content, reach more users, and generally have a “rising tide lifts all boats” type of commercial scenario. In reality, it’s more of a predatory relationship: Walled gardens control the algorithms that expose content to their users, and they have a long history of reporting misleading numbers that media owners then use to make key business investment decisions. (Who can forget the “pivot to video” era and the many media casualties left in its wake?) Perhaps the biggest challenge for media owners is the very nature of content on platforms: What chance do you have if you’re producing content that is shown in someone’s feed next to the concoctions of Macedonian teenagers whose sole goal is to game engagement? Whose rules are you playing by?

What can you as a media owner do? 

  • Skip scale: Media owners often start their pitches to advertisers by mentioning scale in an effort to compete with platforms. This is a losing battle as no one can compete with platforms on scale. What you can do is try to compete on the quality of your audience and context, neither of which is abundant on the platforms. 

  • Audit your data, tech, and partner stacks: This may be a less obvious move, but if you’re competing with Google, does it make sense to continue using its advertising tech stack to sell your own advertising? If your main rival is Amazon, can you afford to use Amazon Web Services in any part of your business? These types of considerations may not readily pop up in RFP evaluations because, in part, it’s challenging to understand the prevalence of the platforms’ influence. We’re left wondering what went through the minds of Disney execs when they replaced Freewheel with Google’s advertising stack, when YouTube arguably remains one of their biggest – if not *the* biggest – main competitors. 

Ad tech companies:

Platform dominance across advertising makes innovation more challenging and creates complex hurdles for new entrants. We see two distinct paths:

Path 1: Build incrementally and add value to existing platforms 

Since platforms command such a significant portion of ad dollars today, the obvious solution seems to be to focus on solutions that make using platforms easier and more worthwhile. It’s easy to see how an advertiser spending nine figures per year on a platform may benefit from better insights into the efficacy of that spend or how creative automation may shave hundreds of employee hours while increasing the likelihood of identifying hyper-performing versions of ads. The challenge here is differentiation: While ad tech has benefitted from abundant funding, is there really room for 50-plus CDPs or 20-plus DCOs in the market, or are some of these sectors approaching commoditization? 

Path 2: Build a next-gen platform 

Internet old timers will gleefully remind us all of the times before Facebook, Amazon, and friends. Google wasn’t the first search engine to emerge, yet it’s the only one that became a verb. Snap and TikTok are great examples of next-gen alternatives to the current platform establishment, but they still monetize in more or less the same way as the incumbents. What new platforms may emerge if the main monetization engine shifts away from user attention into something new? 


For consumers, platforms are generally a pretty good deal. In content terms, they’re the easy button: They push content you’ll “like” to you. They’ll surface things you want and help you find new things to enjoy. They remove a lot of friction from your day-to-day. But in the process, they may inadvertently affect elections and your country’s political discourse or influence the response to public health issues. 

Platforms essentially turn consumer attention into money. As long as consumers are engaging on platforms, this equation will work in the platforms’ favor, compounding lock-in effects. The easiest way to illustrate this may be through share-of-time and share-of-wallet calculations. If you’re an Amazon Prime subscriber, how much of your money is now no longer going to your local mom-and-pop stores or national chains, because it’s easier to buy on Amazon? If you get your news on Facebook, which local news outlets aren’t you funding? Are you OK with these types of trade-offs? 

The first step consumers should take to understand their relationship with platforms is to audit where their attention is going and what share of one’s time do individual platforms command. The perfect illustration for this challenge comes courtesy of Genius Steals’ Faris Yakob (we’re big fans!) and their media diet pyramid:  

Platforms, as we’ve established, aren’t just about media. But for most consumers the starting point – the main hook, if you will – is usually media related. Once consumers understand the impact platforms have on their media choices, they can start to look at what impact this relationship has across all of their commercial choices. (A “wallet audit” should follow a media audit.) If consumers vote with their attention and wallets, options other than scorched earth deserts with a few oases may begin to emerge once again. 

One question

If Facebook (or Google or Amazon) magically disappeared tomorrow, what would the advertising ecosystem look like and where would advertisers go to find their audiences? What would be the metrics that matter and how would we interpret success?

Dig deeper 

Business as usual in AdLand

Moral bankrupcy 

What wiped Facebook off the internet

Q2 beats Wall Street, news at 11 

Thanks for reading,

Ana, Maja, and the Sparrow team

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