We’ve all seen the headlines. Both Google and Facebook are under fire like never before, with reports this week that Cambridge Analytica, a political consulting firm, was able to access 50 million Facebook users' data without their consent. Alongside the talk of their great power and responsibility, which has dogged them for years, a third theme is anchoring the debate more prominently than ever before: accountability.
Is the duopoly too influential in advertising and media? Is anybody able to keep them in check? These are complex premises to unpack, for sure. But the fact that almost everybody Campaign approached would only talk off-the-record about this speaks volumes and illustrates, right from the start, that there may well be a problem here.
The state of play
It isn’t hard to understand why Google and Facebook are under such pressure right now. For the former, the fallout from its major YouTube brand safety scandal continues to leave a stain that won’t wash away, living in the public consciousness ever since ads were found to be funding extremist content on the platform.
Facebook’s recent woes are multifaceted, encompassing the fake news epidemic, pushback on its news feed algorithm change, and the miscalculating of advertising metrics, the very thing advertisers depend implicitly on when deciding how much money to spend with the social network.
"Facebook can change the rules on a whim and there is nothing that brands who have invested millions...can do."
—Arthur Policarpio, Mobext
The stark reality of the scrutiny both companies are under was no more pronounced than when they, and Twitter, were summoned before a US Congressional committee in October to testify on the use of their platforms by Russian agents looking to meddle in the US elections, both through publishing fake content and buying ads.
The theme running throughout all of these problems is Google and Facebook’s influence. If they were small entities, the magnitude of these issues would be significantly smaller. But the numbers plainly illustrate just how powerful they are.
eMarketer says the duopoly accounts for almost half of global digital ad spend. In Asia-Pacific alone, Facebook and Google are expected to account for 67% of digital ad spend in 2018, according to Salesforce’s ‘Digital Advertising 2020’ report. Most tellingly, Magna Global’s advertising forecast estimates that around US$1 out of every US$5 spent in the global advertising market, not just digital, goes to Google or Facebook.
Amazon is often mentioned as the most likely challenger to the duopoly, and it could well be, eventually. But right now its share of ad spend sits at around US$3 billion, so there’s a long way to catch up. As RBS bank CMO David Whelan put it last year: “The fact that two companies dominate the global online advertising market isn’t good for anybody.”
For Arthur Policarpio, CEO of Mobext, Facebook and Google’s overwhelming success has seen them shift quite naturally into the next phase of their evolution, where great power draws significant scrutiny.
“I think people in general have entered a period of deeper introspection regarding Google and Facebook’s impact on society in general,” he opines. “All this is good in my opinion, since it puts pressure on them to clean up these issues.”
Another senior agency executive and ex-Google employee states plainly that “there is no doubt whatsoever that the firms are suffering a huge reputation crisis that is not going away anytime soon”.
“My questions are: Do they care? And are they truly committed to change?”
At the core of concern over any company that is deemed to be too influential is: who has oversight? Of course it’s ridiculous to suggest that Google or Facebook are wholly bad entities. They have quite literally changed the world, revolutionised the digital economy, pioneered cutting-edge innovation that has had several positive outcomes, and unsurprisingly earned enormous wealth from their unparalleled success.
Both companies have helped democratise the advertising industry by allowing any brand of any size to buy media, target audiences, measure and optimise in a manner just not possible before the digital era. It’s pretty hard to argue against this.
But, as with numerous companies in various industries before them, there comes a tipping point where success turns to dominance, and free-market competition is eroded. Simultaneously, Google and Facebook’s weight in the advertising market means it is difficult for many in the industry to truly hold them accountable, although some are now trying.
Sir Martin Sorrell has been among the most vocal critics, and given that he told CNBC that WPP spent around US$5 billion with Google and US$2 billion with Facebook last year, it’s no surprise that his words carry heft. Marc Pritchard at P&G and Keith Weed at Unilever have also made their feelings known, but again as two of the world’s largest advertisers, they have the most leverage. Money talks.
For countless other brands, and the agencies who serve them, it’s not so straightforward. However, industry figures say you cannot simply point the finger at Facebook and Google over this. Agency-brand relationships are not equal partnerships, and with agencies being subservient to their clients, they are often pushed further down the chain of command when there’s a Google or Facebook exec at the table.
“It’s very hard for someone at an agency to sit in a meeting with the client and Google or Facebook and tell them they are wrong,” says one senior APAC agency leader. “Clients are conditioned to believe Google and Facebook are right all the time.
“Agencies are pushed to the bottom of the profit line to simply win or retain business, despite proving their expertise through an often arduous pitch process. But it’s the old adage again: Nobody ever got fired for buying IBM.”
The growing concern is that with their influence, Google and Facebook are now effectively setting the boundaries for good advertising or content themselves, because advertisers have to produce work that fits their platforms’ parameters, over which only they have control.
For example, YouTube announced it is ending 30-second skippable ads, swapping them for six-second bumpers. For sure there is data grounded in the decision regarding viewability, but Google makes the decision and their dominance means others simply have to get with the programme.
It’s similar with Facebook’s carousel ad platform and the talk of two-second ads. Additionally, Facebook’s penchant for moving the goalposts overnight is a source of frustration for brands and agencies. Much has been written about its newsfeed algorithm update, but the point here is less about its effect, than the way it happened: overnight in a blog post that caught the world unawares.
"We don’t see the world in terms of ‘market share’. What we’re focused on is being a good partner to our clients..."
—Mel Silva, Google APAC
Policarpio at Mobext says it was a similar issue with Facebook Pages, which launched in 2007. It prompted brands to invest and acquire fans, that they could then reach for free. But organic reach on Facebook has plummeted from around 16% five years ago to 1-2% now, meaning brands have to pay more to reach more.
“Facebook can change rules at a whim—as they have done now—and there is nothing that the brands that have invested millions in acquiring their fans can do,” he explains. “Facebook is a paid media channel, and a very, very good one at that.”
Those that disagree with the formats, or want to try other things, can’t really take their business elsewhere because no-one else matches either Google or Facebook in scale.
“Agencies feel that control has been wrested away from them,” says the ex-Google source. “Control over client relationships, control of what constitutes ‘quality’ and control over the customer experience.”
Campaign contacted Google regarding some of these concerns. In an emailed response, Mel Silva, Google APAC’s managing director, go-to-market strategy and operations, said no other industry is “as dynamic and competitive as digital advertising”.
“We don’t see the world in terms of ‘market share’,” Silva said. “What we’re focussed on is being a good partner to our clients and a good actor in the industry—we can’t succeed unless our partners do.”
Silva also pointed out that in 2017, Google’s search and ad platforms helped publishers make more than US$11 billion in revenue globally.
In putting the same questions to Facebook, Campaign was sent three links to existing posts on the company blog.
To answer the earlier question, it’s now time to acknowledge that the duopoly certainly appears to be taking their problems seriously.
In the past year, Facebook has belied its reputation for opacity by being very forthcoming on the changes it has made. These include hiring thousands more content moderators, demoting content found to be ‘engagement bait’, overhauling its Page Insights tool and re-labelling its metrics for greater transparency.
At Mobile World Congress last month, Facebook EMEA vice president Nicola Mendelsohn said the company now has 25 measurement partners to evaluate its advertising effectiveness, and that Sorrell’s stinging accusation of the duopoly “marking its own homework” made a deep impression.
For its part, Google has tightened the rules on YouTube creators that make money from their content, shut down numerous channels deemed unfit, updated their measurement tools for greater accuracy, and introduced new controls for advertisers for video and display ads.
“The industry saw us take the [brand safety] issue seriously and, crucially, take meaningful action,” said Silva at Google. “Based on conversations I’ve had with brands, they understand that no system can be perfect, they appreciate the actions we've taken and know we are taking this seriously and are committed to getting better and better.”
But, of course, there is constant chatter that they could both do more, from all stakeholders, not just brands and agencies. The challenge exists in the fact that both Google and Facebook are doing their utmost to maintain and grow their closed-off ecosystems to get a bigger share of the advertising pie.
“They need to make radical changes to how they make money, and that is going to require relinquishing control of customer online behaviour and time,” said one source.
Several industry people Campaign spoke to all said some version of the same thing in terms of leveling the playing field with Google and Facebook: greater transparency and a more equitable relationship.
“I’d like to see them approaching advertisers and agencies more as long-term, true partners who will have a real say in how their platforms should be developed moving forward,” Policarpio proposes.
With their huge presence in so many different areas of the digital economy, chiefly connected by their vast wealth of data, the clamour is growing for some sort of regulatory intervention to curb Facebook and Google’s colossal influence. This would be a dramatic and highly complex step, but one that has been applied to other channels, and more importantly, other dominant companies.
Much as they may not wish to accept it, both companies need to admit they are much more than just technology companies now, says an APAC-based senior agency exec.
“Both Google and Facebook have now grown so large and influential that they can no longer simply act as a company. The public responsibility they bear in this position of influence is almost comparable to that of a government or political body - and so their public interaction and behaviour will need to evolve in line with that.”
Whether that’s wishful thinking, whether a government will step in, we don’t know. But the fact that these questions are being asked increasingly often means the ground is beginning to shift under the duopoly. Well, a little bit at least.