Jessica Liu, Senior Analyst
In 2018, Facebook was hit by one scandal after another. Some scandals were large (election manipulation) and some were smaller (inflating video ad metrics). With outcry over their cryptocurrency Libra, 2019 isn’t looking any better. Many think that Facebook’s downfall is imminent. The truth is a bit more complicated. Senior Analyst Jessica Liu joins What It Means to clarify what the future holds for the social media giant.
For now, revenue and user growth are climbing at a healthy rate. And if users stay, advertisers will stay, too. Regulators have been going after Facebook, but they’re slow. Meanwhile, Facebook is acting quickly to prevent first-party data from leaving the company’s walls.
Yet Facebook may be doomed by the incompatibility between how it makes money versus its privacy vision, plus mounting privacy regulations. Facebook has two major perks for advertisers: stickiness and hypertargeting.
Why stickiness could be in trouble: Younger users prefer private and ephemeral experiences. So far, Facebook has staved off demographic worries by acquiring new platforms. But regulators may start blocking M&As, stalling its expansion.
Why hypertargeting is already in trouble: Facebook’s hypertargeting capabilities are already fading. We predict that social media platforms will move toward contextual advertising, like traditional publishers. This is bad news for Facebook, as it has little to trade on besides its data.