The following is a guest post contributed by Jeremy Epstein, CEO of Never Stop Marketing, a growth marketing advisory firm focused 100% on blockchain and decentralized technologies. He presented at the MarTech conference in Boston earlier this month on Blockchain and the CMO: The Next Era of Marketing.
Much has been written about the Russia-Facebook advertising scandal of 2017.
From my vantage point, we’re seeing the first (and maybe only) Achilles heel for Mark Zuckerberg.
As we know, his profit-making machine depends on being one of only two outlets (the other being Google) where the bulk of the world’s $500 billion+ in advertising spend is deployed.
Yet, as we saw earlier this year with Google and the YouTube video issues, brands are willing to forego the potential massive reach of these platforms when they are associated with things they find unsavory. In that example, brands didn’t trust Google to keep their reputations intact.
In the Facebook example, people are losing trust in Zuckerberg’s ability to not totally destroy their society.
Ben Thompson has a brilliant write-up of the challenges facing Zuck in a post called Trustworthy Networking. It’s well worth the read.
In sum, the first order of issues is that the price points at which these ads are delivered (less than $30) makes it prohibitively expensive (in fact, suicidal) for Facebook or Google to manually review them. It’s not feasible.
So, as Ben says, Facebook needs to “harden the operating system,” (which he borrows from Bill Gates’ memo on “trustworthy computing” following the massive number of viruses prior to the release of XP2).
What Facebook is doing then is to seek to repair trust by:
- Increasing the requirements for authenticity (more documentation, etc.)
- Making advertising more transparent (more tools and tech to catch the bad ads)
It’s a good step — for now. It will increase Facebook’s costs some. It’s anyone’s guess by how much though. The challenge that I see is that Facebook has a trust problem and will continue to have a trust problem because:
- They have a massive audience, which is a honeypot of attention that will attract bad actors.
- Policing those actors at scale will continue to be expensive and increasingly so. They will have to push out to the perimeter of use cases, preventing the “lone wolf” attack via digital advertising that can create a PR — and therefore brand-related — headache, at best, and market cap destroying moment, at worst.
- They are centralized. At the end of the day, Zuckerberg is saying, “hey, you can trust us to get it right.”
- Transparency and closed enterprise eventually get at odds with each other.
Ultimately, as we saw at Equifax, sometimes private, centralized, controlled organizations don’t want to be transparent about things that are going on “in-house.”
And the idea that we should all just “trust Zuck” to do the right thing? That should make you nervous. Besides, now he and his programmers get to decide (even more than before) who gets to run ads and who doesn’t. Which means you are going to go even more into a “filter bubble” (another part of Ben’s great post) that Facebook designs for you, without even realizing it.
I’ve documented tens of times already (and there’s a whole section in the CMO Primer for the Age of Blockchains) about the huge inefficiencies and downright fraud of the existing ad tech infrastructure.
In the ultimate battle between “trust Zuck” and “trust code,” I think Zuck loses. Yes, it could take a LONG time to get there, but we are going to have more of these Russian ad buy scandals in the future, not fewer. Criminals will figure out how to get around the new systems as they did around the old. It will be advertising whack-a-mole.
What’s a better option than a centralized system that relies on people and processes to provide transparency and trust? How about a decentralized system that can provide transparency and trust, but do it without fallible people in the middle?
A decentralized ad tech protocol with independently verified actors whose behavioral attributes and reputation are built over time is going to, ultimately, give people the real transparency they want and need to understand exactly who is paying for the ad they are seeing and whether or not that individual or company is trustworthy over a period of time.
The Economist called blockchain a “trust machine.” It will be exceedingly ironic if the thing that causes Facebook to falter is code that out performs a world-class programmer and businessperson like Zuckerberg.