Is Facebook about to have its ‘Waterloo’ moment? Its position seems indestructible from a revenue perspective, with traditional news sources unable to compete against the behemoth’s level of audience targeting for advertising purposes. However, with the rise of ‘fake news’, a growing feeling of disenfranchisement among younger audiences, their recent reporting scandal and with pivotal advancements in targeting technology soon to be available to every news source with an app – are we about to see a much welcomed change in the status quo?

A dominant market position

Facebook’s stats are staggering. Utilising its 1.79 billion users (as of Q3 2016, Statista) the company was able to generate $23 billion global ad revenue in 2016, making it the largest ad publisher after Google (eMarketer, 2016). Growth in Facebook’s advertisers doubled between 2015 and 2016 (Forbes, 2016), now lying at 4 million. With 60 million small businesses already on Facebook, the company is focused on turning them into advertisers to continue its growth trajectory.

Facebook has been able to achieve this ad revenue by utilising all the data available on its users, including information shared (images, posts, likes), account information, as well as third party data including activity on websites and apps through the Facebook plugin, ‘Pixel’ and custom audiences which can be uploaded by advertisers. Using this bounty of personal data, advertisers are able to select from; locations, age, gender, languages, demographics, interests, behaviours and ‘more categories’. This hyper targeting explains why so many advertisers are flocking to the platform at the expense of the other new sources. Facebook knows a great deal about you.

The dying breed of credible news sources

Ad spend is a zero sum game, and so as advertisers spend more with Facebook, credible news sources are greatly suffering. Unlike Facebook, publications do not currently have advanced profiling capabilities, so ad targeting is carried out using basic online behaviour data (browsing patterns, time of day, geo-location). This makes publications such as The Guardian a much less attractive proposition to advertisers, and helps explain why the publisher reported losses of £69 million for the last fiscal year despite having more readers than ever before (The Guardian, 2016).

Many news sources have also been slow to adopt mobile which, given that 79% of Facebook advertising revenue comes from mobile, exemplifies their precarious position (Recode, 2016).

Are we at a tipping point? – the fake news saga

Facebook’s unfaltering position may not be as strong as previously thought. After recent divisive political changes in the UK and US, there has been a growing public outcry against arguably the single greatest catalyst involved – the Facebook fake news saga. With Trump’s presidential appointment particularly, sources have suggested this could be Facebook’s “Tylenol moment” – referencing the deaths of people who ingested Tylenol capsules laced with cyanide in 1982, nearly crippling the producer and medical giant, Johnson & Johnson (Newsweek, 2016).

A single example of a fabricated “news” story is one that claimed that movie star Denzel Washington had endorsed Trump was shared more than 22,000 times on Facebook in two days. (Facebook/American News).

Facebook grew to a billion users through positioning itself as a social network, however, in the past two years it has aggressively morphed itself into a media site and the world’s ‘newswire’. Facebook of course had its own goals in mind – to maximise profit. It needs to keep users on site and engaged for as long as possible. By encouraging users to post, share, comment and like these stories, Facebook’s algorithm can more accurately target people based on their interests, making them more attractive to advertisers than other news sources.

The nature of political news to polarise and evoke emotion in those scrolling through their Facebook feed makes these headlines inherently clickable. Facebook therefore incentivised clickbait news over more serious news, which opened the way for fake and inflammatory news. Marketers figured this out and produced carefully designed fictional stories with grabbing headlines in order to gain clicks.

Facebook didn’t create the bitter and divided political climate around the world, but the new wave in political propaganda certainly found an accommodating home there. The result is feeds overwhelmed with throwaway political statements that get amplified, even if absurd.

Facebook has a dilemma – it can’t ban political posts as it would lose its position as a source of news content and weaken its ad revenue generation capabilities. However, if fake news continues to pervade news feeds, Facebook will continue to lose credibility and consequently risk pushing large swathes of its audience away. Credible news sources on the other hand, such as The Guardian build their reputations on journalistic ethics that act as a barrier to reporting fake news.

Reporting Scandal

Towards the end of 2016, Facebook announced it had made mistakes with three of its ad-measurement tools; ads creation, live video metrics, and a like/share button discrepancy. Publicis Media, a major digital advertising buyer, advised clients of Facebook’s misreporting and called for greater outside oversight of Facebook’s measurement practices (The New York Times, 2017). Another chink appearing in Facebook’s once impenetrable armour, with Business Insider (2016) claiming such scandals would kill giants in other industries.

Disenfranchised audience

Facebook’s growth is slowing amongst the younger audience. Like every generation experiences; when your mum gets involved it’s no longer cool. Worse yet, now their grandma’s are onboard! There are competitors knocking at the door that are absorbing Facebook’s lost youth. Snapchat’s parent company recently went public with a valuation of $28 billion, potentially shifting the ad spend. The answer, however, is not another monopoly.

Enabling technology – the solution

However, what if credible news sources with apps were as attractive to advertisers as Facebook currently is through technology that can provide targeting levels that are better than what Facebook currently offer, based on user’s offline behaviour?

The next evolution is to look at on-device analytics, implemented into any app, which can anonymously analyse a customers’ mobile photo gallery. By doing so, this tech can accurately understand the customer’s demographic and lifestyle in order to provide advertisers with better-than-Facebook grade levels of targeting.

This means that any news source with an app can return its revenue to the glory pre-digital days. By knowing who their audiences are they will be able to bring value back to the advertisers and in turn benefit by charging a higher CPM, whilst guaranteeing higher CTRs.

This of course is all possible today – which means publishers can finally target consumers based on interest and behaviour-based data points, without needing to expose themselves to the issues that have plagued Facebook and filled news headlines in recent months. Good news for all.

Henry White

Henry White


Henry White, Head of Business Development, Pixoneye.