One of the many macro trends we continue to track at Localogy is privacy reform’s bottom-line impact on Facebook’s business. Despite the media coverage that eviscerates Facebook on a daily basis, how is revenue faring? Is all the negative sentiment confined to media & tech circles?
Evidence suggests that this may be the case. Exhibit A is Facebook’s stock performance. Despite other social media stocks tanking last week, including Snap, Facebook remains steady. In fact, the stock price stayed flat during a terrible PR week for Facebook including damning internal documents revealed.
Perhaps the true test will come today when Facebook announces Q3 earnings. This could impact after-hours trading and how tomorrow’s trading day treats Facebook. In fairness, Snap’s stock decline noted above was in response to missing its guidance targets in its earnings. We’ll see how Facebook does.
Meanwhile, exhibit B comes in the form of SMB sentiments. Localogy will be releasing a new data set in the next week which (spoiler alert), paints a positive picture of its standing among SMB advertisers. So in the end, Facebook’s standing in the press is misaligned with that of actual advertisers.
Shadenfreude
On October 4th, Facebook experienced a global outage. It lasted for almost six hours due to a DNS-related issue, causing a financial impact that approached $100 million according to The Verge. Beyond the actual damage was the Schadenfreude media reaction that’s common for Facebook coverage.
But the question, much like the above, is how much this will impact Facebook’s long-term demand among advertisers. Broadening the question, will Facebook’s overall PR challenges of the past few years – due mostly to privacy reform – have a material impact on advertiser demand, particularly SMBs?
Put another way, have the media and analyst corps created an insular view of Facebook’s misdeeds and exaggerated its demise? And does that reflect how “regular folks” feel? It’s those individuals and businesses that make up the bulk of Facebook’s users and advertisers: their opinions matter most.
So we went in search of answers. Our hypothesis was that negative feelings towards Facebook are much smaller among SMB advertisers than within tech & media circles. That hypothesis was validated to a degree, but still requires some in-depth analysis. We’ll circle back soon to do just that.
