A handful of marketers suspended advertising on Facebook Inc. as the company hustled to quell anxiety about its platform in the wake of revelations that an outside company improperly handled data on tens of millions of its users.
In recent days, Facebook executives have been reaching out to advertising trade bodies, marketers and major ad agencies such as WPP WPP -0.61% PLC, Dentsu Inc. 4324 -5.78% and Omnicom Group Inc. OMC -0.86% to tell them it is working to audit all apps on its platform and reassure its users that their personal data is being protected, according to people in the ad industry and at Facebook.
Facebook also affirmed to ad agencies such as GroupM that their clients’ customer data wasn’t compromised, according to a person familiar with the matter. Marketers upload data to the Facebook platform to help direct ads to various audience segments,
Still, several marketers—including Commerzbank, Germany’s second-largest bank; Mozilla, owner of the web browser Firefox; Sonos, maker of wireless speakers; and Pep Boys’ auto-parts stores—have said they are pulling their Facebook advertising, some only temporarily, as the social network investigates and shores up data-privacy controls.
Facebook said Friday, “Advertisers look to us to help grow their businesses. They know how important it is for people to trust their information with Facebook, and we are committed to regaining that trust. Most of the businesses we’ve spoken with this week are pleased with the steps we’ve outlined to better protect people’s data, and they have confidence that we’ll respond to these challenges and become a better partner and company as a result.”
Facebook shares closed Friday down 3.3% for the day and 14% for the week.
Facebook has several audiences to address in the aftermath of the controversy, including regulators and consumers. Tending to the advertising partners whose spending supplies nearly all the company’s revenue is also a high priority. Facebook is the second-largest digital-ad player, with a roughly 20% share of dollars spent in the U.S., behind No. 1 Google, which has a 37% market share, according to eMarketer.
The controversy is the latest point of tension between marketers and Facebook. They have raised concerns over the past year about the credibility of the data the company provides on viewership of ad campaigns. Facebook has acknowledged several metrics miscues and worked to fix them.
Many advertisers say privately they are content to remain on the platform in the wake of the latest data-handling controversy, while closely monitoring the situation, largely to see whether the crisis sparks an exodus of Facebook users.
During an ad event Thursday hosted by Omnicom Media Group, Facebook’s vice president of global marketing solutions, Carolyn Everson, enumerated the steps Facebook is taking, including hiring forensic-auditing companies to review apps that collected large amounts of user data, according to a person who attended the meeting.
She emphasized to the Omnicom clients and ad buyers in the room that the recent data-privacy questions are specific to access that app developers got years ago.
Facebook has several marketing efforts planned to reassure users about safety on the platform, Ms. Everson said in a separate interview Friday. A new feature coming to the top of the news feed will detail all the apps that have access to a user’s data and will offer users the option to revoke permission. And Facebook will be doing more to “communicate all the millions of ways on a daily basis the platform is being used for good,” she said.
The crisis began last Friday night March 16 when Facebook said it was looking into reports that Cambridge Analytica, a data firm that worked with the Donald Trump campaign in 2016, improperly accessed information about tens of millions of users and retained it for years, even after agreeing to delete it. Cambridge Analytica said it followed Facebook policies.
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Facebook’s data privacy scandal has driven many to contemplate ditching the social network for good. WSJ’s Katherine Bindley explains how, and suggests some non-permanent alternatives. Photo illustration: iStock
Cambridge Analytica obtained the data from a professor at the University of Cambridge who had collected the information by creating a personality-quiz app in 2013 that plugged into Facebook’s platform.
Before a policy change in 2015, Facebook gave app creators and academics access to a treasure trove of data, ranging from which pages users liked to details about their friends.
Facebook doesn’t directly hand over individuals’ data to advertisers but rather pools it to inform its ad-targeting tools. Marketers can share their own customer data with Facebook to help target more ads to their customers or to audiences with similar characteristics. Facebook told GroupM, in response to the agency’s inquiries, that customer lists are anonymized so no one, including Facebook, can see information on individuals.
“We have to protect people’s privacy because at the end of the day, our business is built on the foundation of trust,” Ms. Everson said about Facebook’s data policies regarding advertisers.
Over the past week, the controversy has led to declines in Facebook’s stock price and sparked calls for increased government scrutiny. Facebook has also been contending with a groundswell of users claiming they are abandoning the platform, with many tweeting under the hashtag #DeleteFacebook.
Facebook pages of Elon Musk’s companies, Space X and Tesla, were deleted Friday after calls from web users for the billionaire to take action.
“People are really pissed off and upset,” said one agency executive, whose agency will be watching closely to see if Facebook’s user base declines significantly. Another question, the executive said, is whether consumers will pull back on sharing on the platform, which could reduce Facebook’s power as a marketing tool.
Some advertisers have expressed concern that a backlash against Facebook could spark more regulation of tech companies and their ability to collect reams of data about their users—which could limit advertisers’ ability to target specific audiences on social platforms.
“If advertisers were suddenly unable to target certain segments, because of regulation—such as political affinities, income or wealth accumulation, or race/age/gender—that might challenge advertisers to look elsewhere for options,” said James Douglas, head of media at Reprise, a digital agency owned by Interpublic Group of Cos.
Advertisers also worry that Facebook’s scrutiny of how much access to user data it offers could ultimately work against marketers’ yearslong efforts to get more measurement information on who sees ads and how ads perform. Advertisers emphasize that the data they want can be anonymized and aggregated, and wouldn’t infringe on users’ privacy.
—Alexandra Bruell contributed to this article.
Write to Lara O’Reilly at lara.o’firstname.lastname@example.org and Suzanne Vranica at email@example.com
Appeared in the March 24, 2018, print edition as ‘Facebook Pledges Actions As Some Advertisers Exit Facebook Tries to Calm Advertisers’ Data Fears.’