How Facebook could lose out on advertising over its content ban
Facebook’s recent botched takedown of content publishers could lead to a loss of advertising revenue for the social media platform, says UNSW Business School’s Rob Nicholls
Facebook previously said it would ban media businesses in Australia from its platform in response to the government’s news media bargaining code designed to regulate large tech companies’ use of content produced by such businesses. However, the legislation has only passed the lower house of federal parliament. It has yet to go through the senate – before receiving royal assent from the Governor-General to become law, which is likely to be the end of this week.
However, the social media giant recently banned a raft of mainstream and other news publishers – and also took down content from a wide range of other organisations in the process, including federal and state government health departments, the Bureau of Meteorology, the ACTU, retailers including Harvey Norman and charities such as Bowel Cancer Australia and the Kids Cancer Project.
Facebook’s move a serious “stuff-up”
“Seriously, I would describe it as a stuff-up,” said Rob Nicholls, Associate Professor in the School of Management and Governance at UNSW Business School.
Read more: Should Google and Facebook be forced to pay for news in Australia?
“And I'm being polite in calling it a stuff-up because otherwise, it was a breach of contract or breach of terms of services as a minimum. They’ve blocked all sorts of sites – and that cannot have been by design. That can only have been by error,” said Prof. Nicholls.
“If it were by design, then it would only have been something vindictive and illegal – so it was an error.”
Prof. Nicholls said it was highly unlikely the error was the fault of an algorithm but rather human error. “You can’t say ‘the algorithm made me do it.’ It's human error, and it’s a real problem that is going to lead to reputational harm for Facebook,” he said.
Facebook hires the "brightest and the best” to write its algorithms, and Prof. Nicholls said it has some of the smartest approaches to algorithmic design available. “It competes head-to-head with Apple, Google and Amazon for people who write these smart algorithms.
“They got it wrong, and my guess is they rolled it out too quickly, and they spent most of the morning trying to roll back the ban to only address news sites,” he said.
How the ban could harm Facebook
The botched content ban could also lead to serious reputational and commercial problems for Facebook, as the ACCC produced its first interim report on advertising technology a few weeks ago.
The two big advertising technology players in this market are Facebook and Google, and the ACCC noted in its report that it could be hard for advertisers to tell if they are getting value for money when it comes to their spend.
“Now, if I'm a federal or state government advertiser, and I’m spending money with Facebook to deliver targeted ads to exactly the right users – but Facebook can't tell the difference between News Corporation and a children's cancer charity, or Nine News and a domestic violence help site – then there is some explaining to be done,” said Prof. Nicholls.
“I think that Facebook is going to have a real issue with major corporate, federal and state government advertisers over getting it wrong. And If it was deliberate, then advertisers will avoid using Facebook.”
Advertising budgets: Google vs Facebook?
Its pre-emptive move follows on the tails of multimillion-dollar content deals recently struck by Google with major publishers including News Corporation, Nine Entertainment and Seven West Media. Prof. Nicholls said Google has been very sensible commercially in using its own product and striking the right trade-off between the cost of content and curation.
Read more: In a world-first, Australia plans to force Facebook and Google to pay for news
This may also have significant implications for advertising revenue for Facebook: “are you going to do your online advertising with ‘toxic Facebook’ or ‘good as gold’ Google?” Prof. Nicholls asked.
“It’s a pretty easy decision to make, and to be honest, if Google could get a social media platform up and running tomorrow, the advertiser exodus from Facebook would be very rapid – as would the follow-on of users behind it.”
Prof. Nicholls also said Facebook recently claimed it sent 5.1 billion referrals to Australian news publishers last year. However, if Facebook’s Australian users significantly value news content, its ban of news content will likely lead to less access to authoritative news and a potentially significant drop in users.
“So, what's the value proposition to advertisers? If there's a lot less engagement from users because there's no access to news, that's not going to be attractive to advertisers,” said Prof. Nicholls.
For more information, please contact Dr Rob Nicholls, Associate Professor in the School of Management and Governance at UNSW Business School, and Director of the UNSW Business School Cybersecurity and Data Governance Research Network at UNSW Sydney.