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Everything You Need to Know About Facebook's Privacy Issue with Cambridge Analytica

This week Steve and Susana discuss the issues and future impact of the Cambridge Analytica debacle that's been all over the news. What happened? What is Facebook doing to combat this issue and future issues? and How will this affect? marketers who advertise on the Facebook platform? Learn the answers by tuning in!

Episode Transcript — Everything You Need to Know About Facebook's Privacy Issue with Cambridge Analytica

Speaker 1: You're listening to the Spend 10K a Day podcast, brought to you by the performance marketing experts at MuteSix. This is your source for cutting-edge insight into the world of online advertising. From the team with more Facebook case studies than any other agency on the planet.

Speaker 1: Here are your hosts, Steve Weiss and Stewart Anderson.

Steve: Welcome back to another amazing episode of the Spend 10K a Day podcast operating live from the beautiful confines of the MuteSix recording studio in Southern California, specifically, Santa Monica, west L.A., yes, we are in paradise. Welcome, Suzana [crosstalk 00:00:46] my co-host

Suzana: Hey, Steve.

Steve: How's your day going today?

Suzana: Good, another day in paradise.

Steve: Who doesn't love this place? It's amazing. We're on the West Coast, got beautiful smog that we're breathing every day and...you see the sun every once in a while. It's really cool.

Suzana: Hey, we have the view of the beach.

Steve: Yeah, that's all that matters. As long as you see the beach once, your mind becomes relaxed. You're like "Ah, the beach.

Steve: So, today we have a really interesting topic. I'm sure a lot of listeners have been following the news and Facebook has been in the news, you know, there was a debacle, what we called a debacle, with, you know, privacy. Facebook and Cambridge Analytica structured a quiz about 4 or 5 years ago where they extracted, that's a good word, right, extracted, Facebook customer data, actually, to the tune of 87 million profiles that they got access to and got behavioral insights on these profiles and it set off an alarm across the whole world, pretty much of like, "Wow, what is this crazy company doing?" People were mad at Cambridge Analytica. Analytica, they were mad at Facebook for allowing this one company to manipulate the results of a political campaign and that's kind of where it all came from. Cambridge Analytica, they wouldn't even be in the news unless they...but they're in the news because they worked with the Donald Trump campaign and it' made this whole new sense of awareness around privacy, which has an impact on us performance marketers and this whole podcast today is us discussing "What ar the affects?" The after effects that Cambridge Analytica crisis, we'll call it a crisis now, has on the performance marketing industry.

Steve: Suzana, you've kind of came into this podcast with a very open mind, I would say with the whole controversy, which is great. I wish I had an open mind to it but I've been pinged with question after question after question about it. Tell me some of your thoughts on...

Suzana: Well, what's...I want to know like, what's...like, take a step back, what's the trigger? Because this has been going on for a while. How did this come to fruition?

Steve: So, the Donald Trump campaign, the POTUS, POTUS, he hired...Cambridge Analytica, this magnificent marketing company in London to...actually I'm not going to use the word magnificent. This, embroiled, this, terrible marketing company in...I guess L.A., London, wherever they're based to help them with digital marketing and this company set up profiles or custom audience profiles on specific users and promoted, you know, specific political-facing content to these users. Obviously right-wing content that's going to spur, you know, action within a segment of voters and the issue or the debate is...did they extract customer data? Yes, they did. Did they manipulate those users, that audience data, in a way that helped Trump win the election which waws unfair? Yes, they did. And now the issue is, there's a lot of people who are very...who are very...I hate to make this a political kind of conversation, but there's a lot of people who are like "That's not fair."

Steve: I had a lot of "My data got compromised." I think everyone who is on Facebook and Instagram, you know, understands that their data could've been compromised and now there's a huge sense of awareness that everyone's talking about. I think Facebook is...Facebook's a company that really, I've always thought, values customer data from the early point of when they started. I remember I had to register with my college e-mail address back in he day. I'm sure you [crosstalk 00:04:31]

Suzana: Yeah, same.

Steve: You remember that, and I don't think that they had any malicious, you know, intent by allowing these third party developers, these third parties, they'll use this data in a way, but again, they didn't have a segment of rules at the time that would really regulate the API and what people can pull from the API so it definitely had a negative impact from a press perspective, but...

Suzana: So, Cambridge has this data that they got from Facebook?

Steve: The way I interpreted it, Cambridge Analytica extracted what they...they did this personality quiz on around 87 million people and they extracted this data and then they use this data to re-upload it to Facebook for custom audiences and build, obviously, other segmentations of people off of this data and, you know, they used that in their marketing, um, quote, un-quote "big data" and...

Suzana: So were they using, like...they were just making these fake pages or [crosstalk 00:05:27]

Steve: I think it was a combination of making fake pages, fake, cal them, fan pages around specific topics, using that customer data to build profiles, you know, look-alike profiles off these users. Just a whole bunch of, you know, from an audience perspective, from an ads perspective, whole bunch of unique...unique ads based on these, a very small segment of audiences. It just shows how important audience data is inside of Facebook. How like, you can easily manipulate your campaigns just by having an unfair advantage on audience data.

Suzana: So then, they have this data and then they went around and they created content that would..that's like supposedly manipulating the viewer to, to vote a certain way?

Steve: I don't think they created the content, I think what they did was, they promoted specific pieces of content that...that raised, you know, specific senses of awareness.It was a form of manipulation, obviously if you keep serving the same type of content to people to incite, you know, incite and tile up specific users, obviously, right leaning content, you know, stuff that was wrong in the country, obviously very right wing, you know, whether it's around immigration, whether it's around, you know, all the topics that Donald Trump became president about, I think that's kind of where, that's kind of where they started.

Steve: And , you know, Facebook and the public, everyone, we look back on this, you know, regardless if you like or hate our current president, we look back on this specific turn of events and say "They had an unfair advantage" because they had this data and, obviously, the people who, who had...who's data was manipulated they're like "Wow, I don't have a sense of privacy anymore. What I post to Facebook, all my life, which I share with the social community, now is being compromised." so it raises this new sense of awareness and I think that's why...you're seeing the congress in the United States is really getting involved. You see that, the European Union is getting involved and everyone is really bringing forth this new sense of awareness that...Facebook, you have to really, you have to really be thoughtful about the way you use customer data and I think it's...I think it's really interesting because we're, as marketers, we use that data to really serve the best possible ad to the best possible user at the best possible time and it's really going to have an impact on us.

Suzana: Yeah, it's really interesting because, you know, is the controversy in how they access the data or is the controversy in the manipulation, or both? It sounds like, you know, were they...did they, did they get the data fairly?

Steve: No, they didn't get the data fairly. I think that's, that's where...that's where, you know, the real sense of, you know, controversy or debate cones from is that they had access to the Facebook ads API, which is, obviously, what developers use to plug into Facebook an build technology around Facebook data and around their infrastructure and what Cambridge Analytica did is, and what other companies have done is they've used this API to really build technology around it that'll use Facebook data and...in this specific instance, I think that they...they built the technology that extracted customer profile information in a way that was, obviously, not very...not very real and not very good for the public. It was very intrusive and I think that's where the big debate is and Facebook made this API readily available to developers like Cambridge Analytica to build technology off os and...it's a great Segway into, you know, performance marketing and how this specific, you know, this specific turn of events, this specific time in history, you know, I thin performance marketing is going to change.

Steve: Facebook started off as a platform to connect people socially, to make you, to make your friendships, you know, closer. That's how it started and when they saw that, they saw they were getting a large amount of people's lives, of people's data of what they're...of what they're doing on a daily basis and I think they aw that this could be a great median to serve really targeted ads.

Suzana: Yeah.

Steve: At the time, when they started, they didn't actually have, I guess, the developer resources or the knowledge at the time to really build the most insane, the most, you know, the greatest advertising platform ever built.

Steve: They didn't have the resources for that so they worked with, what you call, third party developers and [inaudible 00:09:51] this program called The Facebook Marketing Partners Program which developed out of that. I'm sure you've heard of the famous companies that have, you know, great companies that have grown out of that program, which is the AdRolls, the Nanigans with the world, these giant advertising agencies that have built technology on top of Facebook and, I think those are the companies that have used this Facebook data to not only run ads on Facebook but to target ads all across the internet and, using this profile data, using log in data to really serve better targeted ads and, I think right now people are starting to see that "Listen, you can't freely give out this data to companies." there has to be laws, it has to be regulated, and Facebook, you know, obviously didn't want to tell anyone what they were doing or how they were doing it but now, Congress is involved so you're going to start seeing that, Facebook is not going to readily make available their ads API to companies.

Steve: I feel like the future is not building off of Facebook data. Initially it was like companies, adtech companies, would build off of Facebook data and now I think the reality is, that's not going to happen anymore.

Suzana: So, you're thinking that...because of this event, one of the things that we're going to see in the future is less accessibility to the API?

Steve: Yeah, I think it's going to go away. A lot of the adtech companies building off of Facebook right now, whether you're working with a company to do Instagram insights or Facebook insights from an analytics perspective or you're working with a company that does ad serving on Facebook. You're going to have to go within Facebook's core service to do all your ads and do all your analytics and I think that's going to be a big change and a big...it's going to be...for the companies that do really good work, you know, on Facebook. Marketers that produce great content, you're going to see your business pick up because you're going to be going against less programmatic buying from third parties and you're going to start seeing that [inaudible 00:11:47] more manual buying on Facebook ads manager, which I think is going to be really...breath of fresh air for companies like MuteSix that are always competing against programmatic partners that plug into MuteSix's AP, that plug into Facebook's API, so we're excited about that.

Steve: Also, there's an exodus of some advertisers, which, you know...oh well. Good-bye.

Suzana: So it'll be like, more humanizing.

Steve: Yeah, I mean, from a marketing perspective, it's not going to be a programmatic, as algorithmic from a third party perspective. It's going to be a very level playing field, which I love.

Suzana: Yeah, so, does that...how does that affect, like, some of the clients that we have? Like, eCommerce clients that we have. Is there any...benefit that they're going to be seeing as a result of what we're going through right now?

Steve: So, you're asking is from the MuteSix partners and companies that we operate...I feel like it's going to be a positive impact.

Steve: I feel like Facebook is going to do a lot better job policing the platform and making, you know, the right choices when it comes to privacy. I mean, they have to earn back the trust of consumers and I think they're doing the right thing and...and I think what you're going to start seeing is that, it's going to have a positive impact on CPM's.

Steve: I think a lot of programmatic buyers who are using, you know, third party technology to beat the system are going to go bye-bye because they're not going to have access to that data anymore. We're already seeing, now, partner categories going away. We're already seeing, you know, I think your Facebook, behind the scenes, is still going to be using this data to optimize, but this data to actually run specific ads to is going to go away. So, I think it's going to make an even more level playing field where Facebook is going to kick out all the bad actors.

Steve: Obviously, we saw today that any type of political ads are going to be labeled political ads. Any type of, next, you know, if you do have custom audience data and you're uploading custom audience's e-mail addresses, you have to be perfectly forthright in how you got that e-mail data. You can't just upload a list of e-mails and expect Facebook just to target ads to those e-mails. These are all really good signs that Facebook really cares about privacy and they really want to create a level playing field for advertisers and also harness the power of social really earn the trust back of the consumer.

Suzana: Do you know how Facebook is going to ensure that the custom audience that we...that is uploaded is legit?

Steve: That's a good question I think that, they're all trying to figure that out now. It's like, you know, maybe they'll go pinky swear a promise [crosstalk 00:14:10] you know, we'll all put our pinkies out and pinky swear.

Suzana: Right. I wonder if it's just like "Check here if it's legit" or...

Steve: I mean, Facebook's in a tough position. I feel...I feel for...we've built a great business partner with Facebook. They've always been really good to us and...I just think, I hope, that they can earn back the trust of the consumer because they're an amazing platform. What they've built is...legendary, obviously, you know, in the history of what we call discovery marketing, there's never a place where you can build discovery focus campaigns at scale so, I hope that, you know, Facebook can earn that trust back but also really focus on safeguarding and building a wall guarding around their data because that's...that's the biggest thing is people need to trust Facebook with their data.

Suzana: Yeah, I think you're right. I mean and, and...this event could be a blessing in disguise because at the end of the day, the viewer is what is telling the marketer and the advertiser what they want to see and if they're unhappy us as marketers are going to ensure that we can provide content that they like because we want to see those conversions come in.

Steve: Yeah, the content creator is the person that runs the platform and I think, you really have to value that relationship a lot deeper. I think that Facebook is a great learning experience. Any time that you have your CEO testify in Congress to really talk about your data practice and talk about how you guys think about...how you guys think about consumer data, it really creates a sense of awareness that maybe you could do more. Maybe there could be more they could do to really make sure that people's data and their personal lives aren't compromised and just remembering that...how personal Facebook is, I mean, I've shared my life story on Facebook, I've been on it since 2007 and...I think that you can't take that for granted. You can't take people's lives for granted. I think that's something that we're going to start seeing. I think that, as they improve that, you're going to start seeing people come back to a platform. I don't think anyone has really left. I don't think Facebook or Instagram is going away, per se, but I do think that this is a wake up call. It shows that you're not invincible.

Suzana: Yeah. It's a fairly...you know, Facebook's been around for quite some time. However, it's still fairly new and they're still learning, and it's growing really fast.

Steve: It's is and I think that people are...learning to deal with the realities of life. We don't have privacy in this world, I think anytime you have the Facebook app on your phone, you're talking on Facebook messenger, that data is being shared. It's being recorded. It's not just Facebook, it's Snapchat, it's Google. We live in a time in humanity where everything we do is, kind of, mapped out and...it's really no getting away from that unless you want to go radio silent.

Suzana: Absolutely.

Steve: Just being aware of that is the number one thing of really making sure to be [inaudible 00:17:06] and aware of what you share on social media because, if you don't, you're really going to get yourself in over your head and I think it's bringing up a lot of different things that we're...as a human public, we're not really aware of.

Suzana: Well, I think that's great information, Steve.

Steve: Yeah, so...

Suzana: Really In-depth.

Steve: I hate to take it off marketing, this is obviously a customer acquisition focused podcast, we want to really bring value to all of our listeners. I care about each and every one of you. I want to share what I learn about marketing and psychology, but, this is something that's really...I felt really compelled to talk about because it has effect on all of us. We're all...whether we're...you feel your competition with anyone, like, we're all in this together. I think that's the reality of the situation, that if something happens to Facebook, it happens to all of us, and we...we all have to kind of, work together to create a better...a better mark on the eco system.

Suzana: I think you did a great job explaining it really clearly too. I think a lot of people had some questions about it so...

Steve: So, to conclude on this podcast...3 or 4 things that are going to change. Number one: partner categories is bye-bye.

Steve: Number two: You are going to have to certify some of your Facebook custom audiences. That's going to be coming in the near future.

Steve: Number three: You're going to start seeing, in my opinion, if I'm predicting the future, some of these ads API partners and some of these analytic partner are also going to be regulated, they're not going to be readily available to...the developer program is going to change, so if you are considering building tech on top of Facebook and Instagram, I would say to be very...walk...you're walking on eggshells right now because it is a very tumultuous time to be a developer on these social programs. So, I'd say really focus on that and...

Steve: Number four: Lastly, I think the way to win long-term at Facebook and at digital marketing is creative. Building a sustainable creative...a way to generate creative, whether it's UGC, whether it's building your own creative team...I think that's what's going to make people win in the long-run. I think that's...that's what I highly recommend companies, as they plan for their future, is to really prioritize building the right team around creative.

Suzana: Absolutely, wonderful.

Steve: Great podcast, everyone and stay tuned for our next podcast, there's a number of topics we'll be discussing after privacy. I know this is kind of a...a little sad one, but, you know, it is happy. We're all aware and now [inaudible 00:19:24] as I look at myself on the table I see that, people are recording me and I just want to say hello to all the people that are recording me that aren't on this podcast. Anyway, hope everyone has a great weekend and we will be back next week.

Suzana: And if you have any questions, feel free to send us a message at our Facebook page at MuteSix.

Get in touch with us.