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Cambridge Analytica and Facebook, consumers are the product – and why it’s great for business, but maybe not for long…

The recent news about Cambridge Analytica and the Facebook data breach has left many users of the social platform aghast at the (perceived) insidious uses of their data. Though companies allegedly using data to swing elections anonymously and with impunity may seem scary, what surprises us the most, is backlash from the platform’s users. Users of Facebook have and will always be the product and for businesses it’s great.

The never-ending feedback loop

Every action on Facebook by a user and will go on to help them to continue to map a very detailed picture. Every like, comment, share as well usage patterns will build up the psychographic persona of a user which will, ultimately, be monetised by the platform. Some users maybe aghast at this fact but the opportunities for businesses to target, with pinpoint accuracy, exactly the type of consumers they want to reach are immense.

One company, many products

Facebook’s acquisition of Instagram and the launch of their Audience Network (an Ad serving platform, like Google’s DoubleClick) means that businesses can tap into all of the targeting capabilities afforded by Facebook’s data and algorithm’s in one place. The economies of scale, ease of billing and, from a marketer’s point of, reporting is very compelling. Most pertinently, from our perspective, we find Facebook advertising really works.

Facebook’s where your parents are

What is becoming apparent to us though is that coveted (from a marketer’s perspective) younger millennial appears to be leaving Facebook in droves. The Coca-Cola’s and McDonald’s of this world will always want to go where this key demographic is, brands follow the money and the money, for the big blue chip FMCG brands is with the young. If brands can only target middle-aged people we can expect to see a lot more case studies selling funeral plans than Cannes Lions for creativity.

Endless Growth?

Facebook’s share price and, some could say business model has always been predicated on endless growth. More users, naturally means more money. Arguably, Facebook saw the writing on the wall as far ago as 2012 with their acquisition of Instagram. Anecdotally, many Instagram users claim not to ‘do Facebook’ whilst happily using a Facebook product and, presumably, be happy to be targeted by the same algorithms, that led them to leave the core platform in the first place. Facebook’s problem now is that they have to try and find more growth from an ageing population.

Ride out the storm

We personally believe that Facebook will be able to recover from the latest news and it won’t be terminal to their fortunes. They, undoubtedly, will have more clever acquisitions up their sleeves and will continue to diversify their business. What the recent news may reinforce though is that the shine is starting to come off the core platform. We believe, personally, that the Facebook star is really waning, not because of the data leakage or the targeting algorithms but because the shiny new digital success story is now populated by the middle-aged.

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