Wednesday afternoon a client emailed me two words and a link: thoughts? The link was the FTC announcing a five billion dollar penalty against Facebook, the largest privacy fine the agency has ever levied, over the Cambridge Analytica mess. Her question underneath the two words was the real one. Do we pause spend.
I opened the stock chart before I answered. It was up.
Five billion dollars, and the market read it as good news. Which makes sense once you do the arithmetic. Facebook had already set aside three billion for this back in the spring, so most of the number was priced in months ago, and the company books more revenue than the entire fine in about a month of ordinary business. The uncertainty ended, and ending uncertainty is worth more than five billion dollars.
So the penalty did what a parking ticket does. It converted a question of conduct into a line item.
A fine only changes behavior when it is larger than the thing it is punishing, and a trust problem only costs a platform money when the people buying attention decide it does.
That second half is the part that belongs to us. Advertisers did not move budget after Cambridge Analytica in 2018. Advertisers will not move budget this week either. I know this because I sat in the rooms in the spring of 2018 where we all said, with feeling, that this changed things, and then the media plan went out unchanged on Friday because the cost per acquisition was still the cost per acquisition.
I am not going to pretend I have a clean answer. I told my client not to pause, because pausing would cost her real customers and would move exactly nothing, and I felt bad typing it.
What I did tell her is that the calculation is not permanent. The trust problem lands on brands eventually, just slowly and indirectly, through the people we are trying to talk to. Every year that a platform is the place where your customer got manipulated is a year that anything appearing there is discounted a little. That does not show up in a dashboard. It shows up as the slow decline of a channel that used to work.
It converted a question of conduct into a line item.
Build the assets you own. Your list, your customers, the reasons someone would look for you on purpose. Not as a moral position. As a hedge against renting your entire relationship with the public from a company that just priced its worst year as a rounding error.
I wrote most of this at Stumptown on Southeast Belmont with the rain doing its July impression, which it does about twice. Nobody in there was talking about the FTC. That is the whole story, really.