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5 Ways the Facebook-Cambridge Analytica Data Scandal Could Affect Digital Advertising

The Cambridge Analytica scandal and the surrounding fallout for social media giant Facebook has dominated headlines recently, and people are reacting with a sense of shock that might be confusing for digital media professionals. While it is common knowledge in the digital ad industry, many consumers had no idea of the amount of personal information collected by the platform, that it was shared with 3rd parties, nor that they could be tracked after leaving a site.

The scandal and the role social media advertising played in it have hit a sore spot in the American psyche and the sustained public outcry has emboldened privacy experts to push for innovation and regulation where it comes to data protection and privacy, and they are finding that investors, legislators, and digital advertisers are taking notice. A majority of industry professionals believe that the Cambridge Analytica scandal will challenge the status quo of how consumer data is collected. But how might the landscape change, what might these potential changes look like for digital advertisers? Take a look at our list to find out.

1. Increased focus on privacy concerns.

The Cambridge Analytica scandal has served to bring the issues surrounding data privacy to the forefront of our global conversation about the boundaries of what ought to be shared, and with whom, on the internet. While the scope of the data platforms like Facebook and Google collect is well known to those in digital media, the general public remained largely unaware of the amount of personal data they were willingly sharing and the potential consequences. The relatively harmless outcomes of oversharing were easy to overlook, but the Cambridge Analytica scandal has thrown the real dangers of it into stark relief. In particular, this story has played into major cultural anxiety surrounding the 2016 election, making it seem all the more dire. Privacy experts feel like the time is right for a major shift in how people approach their online experience.

While previously Facebook was able to hide privacy controls behind a dashboard so convoluted it required written instructions to navigate, now major civil liberties groups such as the ACLU and the Electronic Frontier Foundation are pushing Facebook – and the internet in general – to provide barrier-free access better, more comprehensive privacy controls and a stronger system for notification of misuse.

In an effort to respond to these concerns, Facebook has announced that they will no longer use data from 3rd-party aggregators for hyper-targeted ads. They will also begin to obtain active consent for data collection from European users in compliance with the EU’s new GDPR privacy law – a policy which many speculate could roll over to American users as well. However some feel that for these gestures to be more than performative Facebook needs to radically rethink how they run their platform.

2. New large-scale regulations

In the wake of the scandal many digital advertising professionals are preparing for sweeping new regulations for digital ad targeting and data collection. When the European Union’s GDPR goes into effect on May 25th, it will establish brand new rights for data subjects and put the onus on data controllers to obtain user consent for data collection and allow users a way to access any data collected on them. Insiders feel this, combined with a public that’s ready to have the conversation could lay the framework for the introduction of a US version in the near future.

However, the US has always had less regulatory zeal than the EU, so an American equivalent would likely go through a thorough rewrite. The Twitter-endorsed Honest Ads Act would introduce legislation that applies specifically to political advertisements, and professionals speculate that the rules enacted with this legislation could open the door to further transparency requirements. But as we saw during Zuckerberg’s testimony before the US Senate that many of our key decision-makers don’t have a basic understanding of how the digital ecosystem functions. This begs the question, can they effectively regulate something they don’t understand? The answer remains to be seen.

3. Big name brands stepping away from advertising on Facebook.

After news broke about Facebook’s involvement in the data mining scandal, Mozilla was the first big name brand to “press pause” on their advertising relationship with Facebook in the wake of the scandal. Days later, Facebook COO Sheryl Sandberg said in an interview with Bloomberg that the social media platform had seen “a few” advertisers suspend advertisement on the platform. But it’s not just advertisers who have stepped away from the site.

A recent survey by Marketing Week found that the scandal had prompted 34.4% of respondents to update their privacy settings on Facebook, while 7.66% reported deleting their account altogether. Of those who continued to use the site, 48.8% of respondents felt “much warier” of the type of content they shared on Facebook, while a further 33.6% were “somewhat warier”. In the wake of new privacy restrictions, brand safety concerns, and a potentially shrinking audience, some brands may choose to look outside Facebook for ad placement.

However, currently there are few avenues available for advertisers with a global reach outside of Facebook and Google, and platforms outside the duopoly are largely untested and remain an even larger unknown in terms of brand safety. Major brands recognize this, and investors have as well. While Facebook shares dropped 16% following the March 16th revelations about Cambridge Analytica’s data usage, but have risen steadily back up since then. Facebook even expanded its share of social app downloads in March.

4. Higher scrutiny placed on digital advertisers

During his testimony to the US Senate, Mark Zuckerberg admitted that Facebook had been made aware Cambridge Analytica had obtained user data inappropriately from Dr. Aleksandr Kogan, who harvested data using an app based personality quiz developed by his business. While Kogan was banned, the firm itself was merely required to certify it had deleted any improperly collected data (spoiler alert: it didn’t). Facebook did not actually ban Cambridge Analytica from buying ads on the site, a move that Zuckerberg admitted during his prepared remarks was “a mistake”.

As potentially damaging information about Facebook’s response to data collection and privacy concerns continues to be revealed, the social media giant has received intense public pressure to do a better job protecting their users from potentially predatory or unethical behavior by advertisers. Although Facebook’s specific strategies for improving privacy and limiting ad targeting remain to be seen, most expect that a corresponding pressure for transparent and brand safe content will be applied to Facebook advertisers. In the future Facebook may implement transparency requirements in their contracts with media buyers, require identity verification, and be more proactive in blocking people from buying ad space.

5. Proliferation of ad-blocking and anti-targeting technology

The use of ad blocking technology has been on the rise in the past few years – most estimates show 30% of Internet users employing ad blockers by 2018. However, their use is positioned to grow even faster among the rising concerns about privacy, ad targeting, and fake news. Distrust for ads is currently running so high that even large publishers like BBC recommend downloading an ad blocker.

But it’s not just the use of ad blockers that is increasing – anti-tracking software is more common than ever. Mozilla, mentioned above for having pulled ads from Facebook after the scandal broke, has launched a new extension for Firefox that prevents Facebook from tracking user's data. Privacy software, once only targeted at technologically “advanced” users, is now becoming accessible to a broader audience and gaining traction toward ubiquity.

In Conclusion

It’s difficult to predict the immediate effects of any one event, long term impacts are often felt like a ripple effect. The Cambridge Analytica scandal, and Facebook’s role in it, have broadened public awareness of data sharing and data privacy issues, and now they will likely be the first to feel the impacts of new laws and self-imposed rules for the sake of their own brand safety. So, while it’s unlikely that consumers or advertisers will immediately step away from Facebook, everyone will be watching to see how regulations develop.