Facebook believes it can protect user privacy while still keeping its ad business healthy, although it relies on data for targeted marketing.
The company reported earnings Wednesday after the bell, beating revenue estimates ($21.08 billion vs.Refinitiv analyst estimate $20.89 billion) and beating on earnings per share ($2.56 vs. estimated $2.53 cents).
Despite beating the Street's expectations, Facebook shares went down more than 7 percent in after-hours trading. This was the fourth consecutive quarter of sub-30 percent revenue growth. While the company is still growing, the numbers could signify a slowdown ahead with more digital advertising platforms entering the market as well as looming regulation.
Net income was also down 16 percent year-over-year, indicating the company is having to spend more to keep its platforms at the forefront and its users happy. Cheddar spoke to Facebook vice president of global marketing solutions Carolyn Everson ahead of earnings to talk about the company's priorities for 2020. (For more updates on Instagram specifically, check out the interview with Jim Squires, vice president of media and business for Instagram.)
Here are the main takeaways:
Facebook's Resolutions
A lot of the company goals will help with building back consumer trust. By focusing first and foremost on the safety and security of users, it feels it can convince people to stay on and come back to Facebook.
"We're not going to fix where we have reputational challenges or trust issues by doing marketing campaigns," Everson said. "We're not thinking that's the only way. Actions speak a lot louder than words."
Advertising Revenue Goals Are Not at Odds With User Privacy
Facebook has made moves to ensure people have more control over how their data is used. Privacy checkups now allow users to disconnect all Facebook activities, and marketers can't use third-party data not collected by the brand itself to target users.
This doesn't mean that brands can't effectively use advertising on Facebook platforms, especially if they use their own data. For example, a recent Clinique campaign used Facebook and first-party Clinique data, including information from direct website sign-ups and sales, to find potential customers. Targeted groups included women between the ages of 25-45, women who had watched a Clinique ID video ad before, or women who had indicated an interest in beauty or skincare. The campaign led to twice the amount of ad recall in 14 out of 20 markets.
Features like Stories can also capture the public's attention while providing a valuable avenue for brands. There are now 4 million advertisers who use the Stories format on Instagram, Facebook, and Messenger. Facebook will also invest in interactive formats, like augmented reality ads. One UK campaign from Capitol Records let people play a musical pinball game, which boosted awareness for a new single from Liam Payne by 5.2 points.
"We believe those two things can co-exist nicely," Everson said. "We can give consumers control and we can give advertisers the ability to target, particularly with first-party data."
Why Political Ads Make Sense
While other platforms like Twitter are banning political ads, Facebook has decided to allow political marketing. The company believes it's better for democracy to allow all viewpoints, Everson pointed out.
"We think political advertising is an important part of our platform," Everson said. "We think it's important to give people freedom of expression and voice, and without political advertising, it typically favors incumbents around the world."
