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Facebook scandal will give privacy a boost

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The right to user privacy on the Internet continued to make news headlines last week as the Facebook data breach saga headed to Washington. GIL SPERLING, CTO, Popimedia, believes this will provide positive developments for data privacy and consumer protection.

Advertisers, marketers and brands are obviously keeping close tabs on what effect, if any, this latest scandal to befall the world’s largest and most influential social media network will have on the Facebook user base, or to their level of engagement.

Obviously, a mass exodus of users, or a drop in their willingness to engage on the platform will reduce the effectiveness of Facebook’s data-driven advertising model. Should this happen, advertisers will have to ask if the platform can continue to deliver adequate returns on ad spend.

The fundamental issues surrounding the scandal – the privacy and use of users’ personal data – is not new. This is just the latest in a number of issues related to the misuse and abuse of user information, of which Facebook is not the sole perpetrator. Similar data breaches have happened at other Internet companies and social media platforms.

While I don’t believe that there’s widespread apathy towards these breaches among users, I doubt that these latest revelations will be the tipping point for a mass exodus.

The main reason for this is that Zuckerberg and Facebook moved relatively quickly to respond. They have accepted blame and publicly acknowledged that ‘mistakes were made’. They are also implementing corrective steps.

Coming out of Congress

Facing a five-hour barrage of questioning from Congress in Washington, Zuckerberg reaffirmed that the company’s mission of “connecting people” would continue to take precedence over advertisers and developers.

In the session, Zuckerberg stated that: “We need to take a more active view in policing the ecosystem and watching and looking out and making sure that all the members in our community are using these tools in a way that’s going to be good and healthy.”

Obviously, such words are superfluous without meaningful action to back them up, but there has certainly been changes at Facebook since the scandal broke. Having taken responsibility for the breach, Facebook is now acting by assigning resources to solve the issues.

Zuckerberg announced sweeping measures that have already, or will be, implemented across various aspects of the Facebook platform as part of the second phase of the Cambridge Analytica ‘clean up’.

Word up

He is keeping to the promises made about addressing and resolving the issues and he is widely viewed to be acting responsibility.

These measures include notifying all Facebook users whether they were affected by the leak. This will include a notification prompting users to review which apps and websites have permission to see their data. The roll-out of this element started last Monday.

Facebook also adjusted its privacy settings and ad targeting tools to give users more control over their information and is creating a tool to make it easier for users to approve what information is shared about them.

In addition, Facebook is reviewing where additional risks for data leaks exist. Already underway is an audit of all third-party apps that offer the outside world access to the platform via their API. Any app that collected and misused data will be banned from the platform, and every user who engaged with the app in question will be notified.

Further restrictions imposed on access to user data include a lockdown of the Groups, Events and Gaming APIs. These provided data to developers – such as the number of types of events attended by users – that Facebook now says is unnecessary as they should be able to create useful experiences without scraping this information.

Following Zuckerberg’s appearance on Capitol Hill, Facebook also announced a novel bounty programme, which will reward people who find and report cases of data abuse on its platforms with between $500 to $40,000, depending on the significance of the discovery.

While welcomed, these sweeping changes and reforms that seek to impose stricter data safeguards understandably has Facebook marketing partners and advertisers wondering if their ability to target users effectively and deliver a return on their ad spend will now be limited.

Impact on advertisers

South African-based advertisers and agencies needn’t be concerned, though, as the planned changes to the platform will have a minimal impact, if any, on Facebook advertising in our region.

That’s not to say that significant changes weren’t announced, though. For instance, the shutting down of Partner Categories, a feature that enabled ad targeting on the platform by using third-party data provided by data brokers, could have ramifications across the Internet-based and social media marketing industries. However, its impact will be felt predominantly in the US and parts of the EU where the use of third-party data for narrow targeting is common practice.

This approach was not adopted in South Africa, and we believe that this is a move in the right direction to improve industry best practices and ensure greater transparency regarding the responsible use of end-user data.

There have also been a few minor changes to the platform’s automated leads development solution, but these won’t have an impact on the technical capabilities of the solution.

Are these steps sufficient to stave off a significant backlash from users and advertisers?

We believe so.

For brands to continue realising a return on their ad spend on the platform, Facebook needs to ensure that users keep coming back, remain engaged with the content, and continue to feel like they are getting value.

For that to happen, they can’t feel like their right to privacy is being abused.

Based on recent announcements and the steps already taken, it is clear that Facebook has realised the importance of fundamentally changing its data practices to restore trust among users. We feel that Facebook has achieved that with the measures implemented.

This stance aligns with current user and ad data metrics, which haven’t seen a drop off since news of the data breach first broke. Granted, there was a loss in investor value for holders of Facebook stock, but the fundamental value proposition to users and advertisers seems to still be intact.

Protecting the revenue stream

Zuckerberg also reaffirmed the company’s commitment to its advertising model as the primary source of revenue. That means Facebook’s future depends on its ability to deliver a return on ad spend. When asked whether he has considered offering an ad-free, subscription option for users, Zuckerberg didn’t dismiss the idea, but stated that there will always be a free version of Facebook available.

I also believe that the sunk investments made by most users in the platform, having built their profiles over years, even a decade for some, means that something more significant would have to happen for them to divest from the platform.

Obviously, there’s a threshold of user tolerance and many are already weary of the continual breaches in trust. However, Facebook has now taken accountability and has implemented bold and decisive action.

We’re therefore confident that it will remain business as usual for the brands that leverage the platform ethically to effectively reach their target audiences.

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Online retail gets real

After decades of experience in selling online, retailers still seek out the secret of reaching the digital consumer, writes ARTHUR GOLDSTUCK.

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It’s been 23 years since the first pizza and the first bunch of flowers was sold online. One would think, after all this time, that retailers would know exactly what works, and exactly how the digital consumer thinks.

Yet, in shopping-mad South Africa, only 4% of adults regularly shop online. One could blame high data costs, low levels of tech-savviness, or lack of trust. However, that doesn’t explain why a population where more than a quarter of people have a debit or credit card and almost 40% of people use the Internet is staying away.

The new Online Retail in South Africa 2019 study, conducted by World Wide Worx with the support of Visa and Platinum Seed, reveals that growth is in fact healthy, but is still coming off a low base. This year, the total sale of retail products online is expected to pass the R14-billion mark, making up 1.4% of total retail.

This figure represents 25% growth over 2017, and comes after the same rate of growth was seen in 2017. At this rate, it is clear that online retail is going mainstream, driven by aggressive marketing, and new shopping channels like mobile shopping. 

But it is equally clear that not all retailers are getting it right. According to the study, the unwillingness of business to reinvest revenue in developing their online presence is one of the main barriers to long-term success. Only one in five companies surveyed invested more than 20% of their online turnover back into their online store. Over half invested less than 10% back.

On the surface, the industry looks healthy, as a surprisingly high 71% of online retailers surveyed say they are profitable. But this brings to mind the early days of Amazon.com, in 1996, when founder Jeff Bezos was asked when it would become profitable.

He declared that it would not be profitable for at least another five years. And if it did, he said, it would be in big trouble. He meant that it was so important for long-term sustainability that Amazon reinvest all its revenues in customer systems, that it could not afford to look for short-term profits.

According to the South African study, the single most critical factor in the success of online retail activities is customer service. A vast majority, 98% of respondents, regarded it as important. This positions customer service as the very heart of online retail. For Amazon, investment back into systems that would streamline customer service became the key to the world’s digital wallets.

In South Africa online still make up a small proportion of overall retail, but for the first time we see the promise of a broader range of businesses in terms of category, size, turnover and employee numbers. This is a sign that our local market is beginning to mature. 

Clothing and apparel is the fastest growing sector, but is also the sector with the highest turnover of businesses. It illustrates the dangers of a low barrier to entry: the survival rate of online stores in this sector is probably directly opposite to the ease of setting up an online apparel store.

A fast-growing category that was fairly low on the agenda in the past, alcohol, tobacco and vaping, has benefited from the increased online supply of vapes, juices and accessories. It also suggests that smoking bans, and the change in the legal status of marijuana during the survey, may have boosted demand. 

In the coming weeks, we can expect online retail to fall under the spotlight as never before. Black Friday, a shopping tradition imported “wholesale” from the United States, is expected to become the biggest online shopping day of the year in South Africa, as it is in the USA.

Initially, it was just a gimmick in South Africa, attempting to cash in on what was a purely American tradition of insane sales on the Friday after Thanksgiving Day, which occurs on the third Thursday of November every year. It is followed by Cyber Monday, making the entire weekend one of major promotions and great bargains.

It has grown every year in South Africa since its first introduction about six years ago, and last year it broke into the mainstream, with numerous high profile retailers embracing it, and many consumers experiencing it for the first time. 

It is now positioned as the prime bargain day of the year for consumers, and many wait in anticipation for it, as they do in the USA. Along with Cyber Monday, it provides an excuse for retailers to go all out in their marketing, and for consumers to storm the display shelves or web pages. South African shoppers, clearly, are easily enticed by bargains.

Word of mouth around Black Friday has also grown massively in the past two years, driven by both media and shoppers who have found ridiculous bargains. As news spreads that the most ridiculous of the bargains are to be had online, even those who were reticent of digital shopping will be tempted to convert.

The Online Retail in SA 2019 report has shown over the years that, as people become more experienced in using the Internet, their propensity to shop online increases. This is part of the World Wide Worx model known as the Digital Participation Curve. The key missing factor in the Curve is that most retailers do not know how to convert that propensity into actual online shopping behaviour. Black Friday will be one of the keys to conversion.

Carry on reading to find out about the online retailers of the year.

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Reliable satellite Internet?

MzansiSat, a satellite-Internet business, aims to beam Internet connections to places in South Africa which don’t have access to cabled and mobile network infrastructure, writes BRYAN TURNER.

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Stellenbosch-based MzansiSat promises to provide cheap wholesale Internet to Internet Service Providers for as little as R25 per Gigabyte. Providers who offer more expensive Internet services could benefit greatly from partnering with MzansiSat, says the company. 

“Using MzansiSat, we hope that we can carry over cost-savings benefits to the consumer,” says Victor Stephanopoli, MzansiSat chief operating officer.

The company, which has been spun off from StellSat, has been looking to increase its investor portfolio while it waits for spectrum approval. The additional investment will allow MzansiSat’s satellite to operate in more regions across Africa.

The MzansiSat satellite is being built by Thales Alenia Space, a French company which is also acting as technical partner to MzansiSat. In addition to building the satellite, Thales Alenia Space will also be assisting MzansiSat in coordinating the launch. The company intends to launch the satellite into the 56°E orbital slot in a geostationary orbit, which enables communication almost anywhere in Africa. The launch is expected to happen in 2022. 

The satellite will have 76 transponders, 48 of which will be Ku-band and 28 C-band. Ku-band is all about high-speed performance, while C-band deals with weather-resistance. The design intention is for customers of MzansiSat to choose between very cheap, reliable data and very fast, power-efficient data. 

C-band is an older technology, which makes bandwidth cheaper and almost never affected by rain but requires bigger dishes and slower bandwidth compared to Ku-band connections. On the other hand, Ku-band is faster, experiences less microwave interference, and requires less power to run – but is less reliable with bad weather conditions.

MzansiSat’s potential military applications are significant, due to the nature of the military being mobile and possibly in remote areas without connectivity.  Connectivity everywhere would be potentially be life-saving.

Consumers in remote areas will benefit, even though satellite is higher in latency than fibre and LTE connections. While this level of latency is high (a fifth of a second in theory), satellite connections are still adequate for browsing the Internet and watching online content. 

The Internet of Things (IoT) may see the benefits of satellite Internet before consumers do. The applications of IoT in agriculture are vast, from hydration sensors to soil nutrient testers, and can be realised with an Internet connection which is available in a remote area.

Stephanopoli says that e-learning in remote areas can also benefit from MzansiSat’s presence, as many school resources are becoming readily available online. 

“Through our network, the learning experience can be beamed into classrooms across the country to substitute or complement local resources within the South African schooling system.”

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