Forget Cambridge Analytica. Every dollar spent on Facebook by political parties takes us closer to Zuckerberg choosing future political leaders.
Questions about Facebook’s role in these turbulent times are hardly new: moderating violence and hate speech; the amount of money spent by commercial advertisers; the rise of echo chambers; Trump and the Brexit campaigns ‘dog whistle’ political marketing.
All these issues alone raise serious questions about how Facebook is being used. But put it all together and it gets even more worrying.
I. From consumer data to advertising results
We are all aware that Facebook knows everything about us. We also know companies’ increased marketing spend with Facebook and Google ads. But what people aren’t discussing is what Facebook knows about the results of that marketing.
‘Even if Zuckerberg follows the Bill Gates model and delinks himself from the Facebook business, it is not possible in the medium-term for Facebook to continue to accrue the alchemic knowledge to win elections.’
Let’s suppose Coca-Cola spends $50 million this year on Facebook advertising. Who knows the results of that marketing – what worked, what didn’t, how different people responded to the advertising? Well, obviously Coca-Cola knows. And their advertising and other marketing agencies. So, Sir Martin Sorrell knows. And…Facebook knows.
Now Pepsi. Suppose they also spend $50 million on Facebook advertising this year. Pepsi will know the results. So, too, their marketing agencies, let’s say Omnicom. And again, Facebook.
For Coke and Pepsi, this knowledge adds shareholder value. In addition to selling their products this year, they have increased their marketing knowledge, helping them refine their future strategies. Over several years, this knowledge creates a competitive advantage versus new entrants or lesser advertisers. It makes it more difficult for new competitors to effectively advertise new sodas, shampoos, or cars, because the incumbents have increasing consumer insights advantages with every dollar spent.
This also works well for Sir Martin and his marketing colleagues. With every year that JWT and Ogilvy know the results of their clients’ campaigns, they are building competitive advantage over those agencies with fewer clients, because they know what works.
If all creatives are equally creative, this knowledge is the differentiator.
Now Facebook. Facebook knows what works and what doesn’t, for everyone.
Coca-Cola and Pepsi, Unilever and P&G, Audi and Ford etc. All the clients of WPP, and Omnicom, and Publicis. Not only does Facebook have the ‘raw’ data of the millions of people it sells to advertisers, it is building the largest consumer insights database / algorithm the world has ever seen. Facebook knows exactly what works for each Facebook user: who responds to which ad, at what time, for how long, and comparatively to everything else they see.
II. From commercial advertising to political marketing
Perhaps this commercial issue will be addressed by governments. Competition regulators are already focusing on data and its impact on markets.
But political marketing is where things get really interesting.
We know the Brexit VoteLeave and Trump campaigns worked with Cambridge Analytica, who apparently have a model of behavioural insights which allows unprecedented micro-targeting of voters. But it’s emerging that it is Facebook itself – and not the CA model – that is the real added value.
In the run-up to the UK election this June, both the Conservatives and Labour are spending £1 million with Facebook. Facebook has built a team to focus on helping political clients to advertise, just as they have for commercial clients. It is comprised of former strategy advisors to political parties and the like.
Now let’s extrapolate the Coca-Cola and Pepsi example to elections. Kushner and Bannon know what worked for Trump. May will know what worked for her, and Corbyn will know what (probably didn’t) work for him. The political consultancy market is more fragmented than advertising, so there are fewer Sir Martin Sorrells aggregating the results to sell to new clients.
But Facebook? Facebook knows everything. What worked and didn’t for Trump. And for Hillary. And Le Pen. And for every politician and political party that spends with them.
Incumbent politicians in less democratic countries are known to spend public money advertising to win future elections, and run constant campaigns. Facebook is probably already helping some colourful politicians consolidate their power in those corners of the world.
But this knowledge of which messages to send when, and to whom, in order to target swing-voters, could impact every future election, everywhere. As political parties continue to spend with Facebook, it is not politicians but rather a company based in Northern California that will know the secret ingredients to getting politicians elected. They know precisely what builds the necessary swing, in any neighbourhood and district from Center City Philadelphia to Baden-Württemberg.
It could be argued that political spending with Google creates the same problem. But Facebook’s political work is more insidious because of the private nature of ‘dark ads’. For instance, the Trump campaign targeted African-Americans with anti-Hillary attack ads in 2016 – as one of its three segmented voter-suppression strategies – but it isn’t easy to see the content of those ads today because of their targeted nature. Whereas, when the Conservatives in the UK bought a Google ad targeting anyone who googled ‘dementia tax’, they were ridiculed across the internet within an hour.
With Facebook, there are two factors more disturbing than Google ads: one, the ability of Trump and others to distribute dog whistle ads unseen to most people who aren’t sympathetic, and two, the asymmetry of information held by Facebook after the ad-run.
III. Zuckerberg for President?
Facebook is not yet seen as the ‘Evil Empire’, in large part because of the personal brand of Zuckerberg as young and smiley / a little geeky / flip flops to work / cute dog / new baby etc. But it is common for tech companies to ‘grow up’ after the founder matures, and be run as a more standard enterprise. Imagine an older, more traditional CEO running the most valuable company on Earth, with the power to decide any election, using methods that are not understood by most people outside the company. Picture a CEO… like Trump.
Now, there is increasing talk of Zuckerberg running for public office, perhaps even one day for President. This month’s commencement speech at Harvard was indeed a carefully thought-through set of future policies, from Universal Basic Income to delinking healthcare from employment.
However, his political positioning will be the catalyst for wider discussion of Facebook’s political engagements. Even if Zuckerberg follows the Bill Gates model and delinks himself from the Facebook business, it is not possible in the medium-term for Facebook to continue to accrue the alchemic knowledge to win elections. Who could the public trust to own such a machine? Do we worry that Facebook starts to favour pro-tech politicians? Or even run its own Manchurian candidates to protect the owners of the data from government interference?
We imagine that there are already quiet discussions among leading shareholders in Facebook; that as the revenue grows and power of the political ‘practice’ in the company becomes clear, this will force governments to take radical action to take apart the machine. If not handled carefully, much of Facebook’s advertising machine is also at risk. It’s far better for Facebook commercially to take the proactive step and close down its political advertising, thereby protecting the billions of dollars of value of commercial business.
If Facebook continues to work in one election after another, data mining and manipulation will become central issues. Take the 2017 German election as an example: do we expect Merkel and Schulz to quietly invest similar sums on dark ads as in the US and UK? Or, if Merkel rejects the model, will she raise the issue in public?
Right now, this is a trial balloon. We are watching. Just like Facebook.
Margot Lotz and Simon Levitt, Harwood Levitt Consulting