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Why Facebook is still bulletproof


A recent study showed that misinformation about Facebook (NASDAQ: FB) is clicked six times more often than factual material, but Facebook has already suffered a lot of similar criticism.

In this segment of “The Five”, recorded on September 3, Fool contributors Jeremy Bowman, Brian Withers and Toby Bordelon discuss the implications for negative press on Facebook, and why the company can withstand the challenges.

Brian Withers: On to number 3, Facebook is in the news. It must be positive, for Facebook to save the world.

Jérémy Bowman: [laughs] Isn’t that still the case?

Withers: [laughs] Facebook is never in the news for the right things. This time around, it’s a study from NYU that shows misinformation on Facebook and other social media platforms is clicked six times more often than factual information. Wow. Not surprised, but think of it in terms of Facebook, not necessarily. It really has a ripple effect. I am thinking of Facebook customers. Not just for social media platforms, but all of those like Nike who spend money with social media platforms. Jeremy, you’re the first with this one. Do you think the inability of Facebook and others to stop fake news from spreading information will slow the pace of digital advertising on the internet?

Archer: Yes. I think we would all like to see this problem resolved, but the reality is it seems so entrenched. There is YouTube and all those platforms that have the same problem. I think what’s interesting about this question too is that we saw this unfold in real time last year. I remember after the murder of George Floyd there was a pretty big boycott against Facebook that was called, don’t stop or, sorry, I don’t know, no profit for that or something like this campaign. Stop profit for it maybe. But it got a lot of big companies signing up. If you remember there was a big social movement with a lot of businesses back then. Coca Cola, Verizon, Clorox were some of the big names who took spending off Facebook for months. I think from the point of view of the organizers of the boycott, it was a huge success. They got a ton of media coverage. Many companies have asked to boycott. Facebook did exactly that, and it may have only hampered the growth of the business. I think their third quarter sales were up, I mean 20-25 percent. Maybe some expenses went to some of their rivals like Pinterest or Snapchat [of Snap, Inc]. I think at one point Mark Zuckerberg was like, they’ll be back, don’t worry, [laughs] to investors. I think there aren’t many other places to go and I don’t know if there is, as far as fake news goes, anywhere you can go that won’t have this. problem somewhere. We see it on Twitter too much. I think on Facebook it’s so dominant, they’re really becoming a utility in a lot of ways with something like three billion users on all of their properties. It’s hard to walk away from it both as a user and as an advertiser.

Withers: Toby, how about you, man?

Toby Bordelon: I don’t know where the advertisers would go. I mean, listen, the customers are online, the buyers are online. Even if you are going to buy in person, most people tend to do some of their research online, a fresh offer, like this is where they are. Advertisers need to be where buyers are. There really is no choice. Whatever you think of Facebook or some of those online companies, today if that’s where people hang out, that’s where advertisers are going to be, one way or another.

Withers: If it’s not you, it’s your kids, right?

Bordeaux: Yes. Because think about it, if you are an advertiser you might be making noise, there are controversies like, we don’t want to run our ads for a few weeks, maybe, [laughs] or a few months at most, but you want customers, if that’s where people’s eyes are you have to put your ad in front of them, otherwise your competitor will. I think it’s just a reality. The other thing to think about and likewise, if something is controversial it means a lot of people are probably getting engaged and as an advertiser this is where you want to be. You have to walk a line, but the sites that are controversial and get the most traffic go there, that’s where the people you’re selling to are.

Withers: For Toby, no press is bad press. Here is. Well I’m going to take a look at my friend Matt Frankel here who looks like, well what about Boston Omaha display business? [laughs] I can hear you, Matt, but I’m going to go back to Toby. Where are the consumers? It’s a train that has left the station and it’s not coming back. There is nothing that is going to slow down online advertising, programmatic advertising, digital TV advertising. The whole world is moving from the way we advertised to the future state where we have targeted targeted advertising and we know things about you and we’re going to use those things that we know about you to at least get you to see and interact with the things we think you’ll like. Interesting. I remember when Zuckerberg was like, yes they’ll be back. He is right. [laughs] He is absolutely right.

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