To shed light on why the Cambridge Analytica drama created so many headaches for Facebook, play this fun game: Ask the next five people you meet (who don’t work in tech) how they think Facebook really made more than $40 billion in revenue last year. Most people can happily tell you that Apple stays in business by selling phones and laptops, Ford sells cars, and NBC commercials. But when it comes to the internet–the foundation of the 21st century economy–it’s a struggle for normal people to articulate how companies like Facebook can be so successful when the services and news they provide are free.
Whatever your position on the ethics of Facebook, the biggest challenge facing the world’s foundational social network right now is not #deletefacebook, data security, or PR punditry over whether Mark and Sheryl took too long to talk to journalists. It’s not even that the company has inadvertently been cast in history’s greatest spy drama–which just happens to be playing out on our TVs and in our news feeds and is the reason this story penetrated news cycles beyond tech media. (Despite all these things, business continues to boom.) Facebook’s real problem–its vulnerability–is the gulf that exists between people’s negligible understanding of its business model and what Facebook’s business really is.
What is Facebook, really? It is, of course, the definitive “social network” and where nearly half of us get our news. Depending on the year, it might tell you its mission is to connect the world, “develop the social infrastructure to give people the power to build a global community that works for all of us,” or–in response to recent social backlash–make sure time spent on the platform is time well spent. Whatever Facebook thinks it is, its business is to sell ads. Facebook’s Ad Manager tool makes it easy for anyone to pursue marketing goals like awareness, product consideration, and sales by promoting content, links, and offers to micro-targeted audiences. Its immense database means these audiences can be incredibly specific across categories like location, demographic groups, interests, and behavior.
The fact that Facebook sells ads is not especially remarkable (although Facebook’s advertising platform is remarkably good and Facebook is also remarkably good at telling Wall Street how good it is at advertising; the company’s investor relations and industry communications teams are some of the best in the business). What’s truly remarkable is the dirty secret that so many of today’s tech CEOs are really advertising executives running advertising businesses. That this isn’t central to the story Facebook tells about itself leaves them fending off conspiracy theories, speculation, and the misconceptions riddling news stories and angry posts about quitting Facebook.
In hand-to-hand Twitter combat and exclusive sit-downs with reporters, Facebook execs tried valiantly to set the record straight. Zuckerberg told CNN “we don’t sell any data to anyone.” Andrew “Boz” Bosworth emphatically stated that selling user data “is the opposite of our business model.” React as they might, confusion and speculation about Facebook’s business will only continue until the company comes to terms with the fact that it’s in the advertising business and leans into helping its users–essentially the entire general public–understand how it really works.
Many people working in product design and technology are understandably reluctant to entertain the idea that the end result of their long hours and hard work is an ad platform–the 21st century version of an 18th century business. Advertising isn’t why Mark Zuckerberg started Facebook or, presumably, what gets him out of bed in the morning. Engineers and designers whose identities are invested in changing the world don’t want that work tarnished by association. But the decision to pay for everything Facebook does by selling advertising means–whether he likes it or not–Mark Zuckerberg is just as much the CEO of an advertising company as a social network. The sooner Facebook reconciles this for itself and its users, the less vulnerable it will be to stories like last week’s.
Facebook doesn’t have to look far for answers. It’s biggest competitor–Google–runs the world’s most powerful search engine on an equally powerful ad network. Google accepted the dichotomy inherent in its business years ago, leading to clearer standards and communication about how advertising would be integrated into its products. Google’s ads continue to be clearly differentiated from its core product and its acceptance of the role of advertising in its business precipitated the creation of Alphabet, an umbrella company better suited to delivering on the organization’s global ambitions and efforts to find ways to move beyond attention-based business models.
The urgency for Facebook to be similarly clear is only compounded by how much more powerful its advertising product will become as its AI development is connected to what is surely the largest database of psychological and behavioral user information ever compiled. If Facebook already knows enough about its users to nearly guarantee they will ‘Like’ the posts at the top of their news feeds, improved AI will give them the ability to catalyze far more consequential behavior in the future.
Everyone engaged in product design and communications at internet companies should take note: Be transparent with your users about your business model, especially if you are providing them with a free service. We are responsible for ensuring users are just as informed about how our products work as our shareholders, investors, and the news media are. As for Facebook: The company has a critical opportunity to teach more than 2 billion people how internet businesses really work. Doing so would not just shore up trust with their own users, but engage the public in a real dialog about the foundation of the digital economy. Rather than basking in Schadenfreude over their troubles, we should encourage them to embrace it.
Sam Weston is a strategic communications consultant. You can reach him at @samweston and www.samweston.co.