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Did Mark Zuckerberg Successfully ‘Diffuse the Potential Explosion’ Around Facebook’s Ad Biz?

Experts weigh in on impact of social network’s advertising blunders

It hasn’t been a good month for Facebook’s advertising business.

The social network, along with Google, dominates the digital ad game, combining to rake in more than 80 percent of all new online marketing dollars. But a slew of missteps has put Facebook’s bread and butter in the spotlight for all the wrong reasons: dubious measurements of its audience reach, anti-Semitic posts slipping through its ad system, and admitting $150,000 in Russian propaganda — capable of reaching millions of users — had run on its platform leading up to and after the 2016 election.

The negative news has rattled many across Facebook’s massive user base, calling into question if its recent issues could drive people away from the platform.

“The core of any brand is trust, complete trust,” Chad Kawalec, CEO of Brand Identity Center, told TheWrap. “And if that trust is betrayed in any way, it starts to deteriorate the confidence people have in that brand. And if it continues, they’ll start to seek out other options.”

This sentiment was echoed by Ira Kalb, a marketing professor at USC Marshall School of Business. “The main thing you have with the public is trust,” Kalb told TheWrap. “And if there’s any reason for people no to trust you, that’s really going to hurt your business.”

For a company as advertising-dependent as Facebook, a dent in its substantial two billion users would be a disaster. As Kalb puts it, the social network is “sort of an advertiser’s dream,” with its bevy of data making it a cinch to target users. To safeguard against losing apathetic users — especially in light of the Russian ad revelations — Kalb said it’s best for the company to “admit and apologize.”

Facebook CEO Mark Zuckerberg appears to be on the same page, addressing Russian interference in a video posted to his Facebook page on Thursday, though stopping short of an apology. Months after initially saying it was “pretty crazy” to believe fake news influenced the election, the 33-year-old exec has changed his tune. Zuckerberg said Thursday that it’s “not realistic” to prevent “all interference,” but that the company had shut down “thousands of fake accounts.”

Kalb said Zuckerberg needed to “diffuse the potential explosion,” adding: “What a lot of companies do — that don’t understand this well — is sweep things under the rug, hoping they’re going to go away, and they rarely go away. So what happens is they build up pressure and they explode. And then it’s too late.”

“I care deeply about the democratic process and protecting it’s integrity,” Zuckerberg said. “Facebook’s mission is all about giving people a voice and bringing people closer together. Those are democratic values and I don’t want anyone to use our tools to undermine democracy. That’s not what we stand for.”

The CEO said the company would work with congressional investigators, turning over information on 3,000 Russian-bought ads. Facebook has also added tools for flagging fake news (although its effectiveness has been unremarkable), and removed the ad fields that allowed Anti-Jewish posts to go live.

But if Facebook is truly in danger of turning off its users — and in turn, its advertisers — there is little evidence right now. Business is booming. Its shares are trading near an all-time high of about $172, and, together with Google, will haul in 63 percent of digital ad spends in the U.S., according to eMarketer. At the same time, Facebook-owned Instagram and WhatsApp have been stacking users, and the company recently rolled out it’s “Watch” video platform.

As long as the company continues to show its advertising strength, recent bad press will do little to scare businesses away, argued Kawalec, who said the benefits of using Facebook are still too strong.

“It’s still all systems go. [Facebook] is one of, if not the, most persuasive medium. When I talk to clients, there are two things that are a must: Facebook and Google,” he said.

Does that make Facebook teflon, impervious to blowback? No, but even with its recent string of damaging headlines, the company hasn’t reached a tipping point with its users or clients, according to Kalb.

“I don’t think any company is too big to fail,” he added. “But as long as you’re giving your main customers what they want, I think they’ll be successful — and I think they are successful and will continue to be.”