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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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Gadget goes to Hollywood

Gadget visited the Netflix studios last week. In the first of a series, ARTHUR GOLDSTUCK talks to CEO Reed Hastings.

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Netflix CEO Reed Hastings is no stranger to Africa. He has travelled throughout South Africa, taught maths in Swaziland for two years with the Peace Corps, and visits close family in Maputo. As a result, he is keenly aware of the South African entertainment and connectivity landscape.

In an exclusive interview at the Netflix studios in Hollywood, Los Angeles, last week, he revealed that Netflix had no intentions of challenging MultiChoice’s dominance of live sports broadcasting on the continent.

“Other firms will do sport and news; we are trying to focus on movies and TV shows,” he said. “There are a lot of areas that are video that we are not doing: sports, news, video gaming, user-generated content. We don’t have live sport.

Reed Hastings at the Netflix studios in Hollywood last week. Pic: ADAM ROSE

“We’re not replacing MultiChoice at all. Their subscriber growth is steady in South Africa. They serve a need that’s independent of the Internet, via low-price satellite. There is no intention of capturing that audience. If they’re growing, it’s because they serve a need.”

While Reed ruled out any collaboration with MultiChoice on its satellite delivery platform, despite its collaboration with another pay-TV service, Sky TV in the United Kingdom, he did not close the door. He stressed that Netflix saw itself as an Internet-based service, and would pursue the opportunities offered by evolving broadband in Africa.

“If you look in other markets like the USA, how Comcast carries us on set-top boxes with their other services, it could happen with MultiChoice, the same as with all the pay-TV providers.

“We’re really focused on being a service over the Internet and not over satellite. Our service doesn’t work on satellite. Where we work with Sky is on Internet-connected devices. We’re happy to work on Internet-connected devices. We tend to work on smart TVs, but need broadband Internet for that.

“Broadband is getting faster in Nigeria, Tanzania, Kenya and South Africa – we can see the positive trendlines – so it’s more likely we will work with broadband Internet companies.”

Hastings is a firm believer in the idea that one content provider’s success does not depend on pushing another down.

“HBO has grown at the same time as we have, so can see our success doesn’t determine their success. What matters is amazing content with which the world falls in love.”

Click here to read about Netflix’s international expansion, and how the streaming service selects content for its platform.

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Take these 5 steps to digital

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By MARK WALKER, Associate Vice President for Sub-Saharan Africa at IDC Middle East, Africa and Turkey.

Digital transformation isn’t a buzz word because it sounds nice and looks good on the business CV. It is fundamental to long-term business success. IDC anticipates that 75% of enterprises will be on the path to digital transformation by 2027. 

However, digital transformation is not a process that ticks a box and moves to the next item on the agenda – it is defined by the organisation’s shift towards a digitally empowered infrastructure and employee. It is an evolution across system, infrastructure, process, individual and leadership and should follow clear pathways to ensure sustainable success.

The nature of the enterprise has changed completely with the influence of digital, cloud and the Fourth Industrial Revolution (4IR), and success is reliant on strategic change.

There is a lot more ownership and transparency throughout the organisation and there is a responsibility that comes with that – employees want access to information, there has to be speed in knowledge, transactions and engagement,” he adds. “To ensure that the organisation evolves alongside digital and demand, it has to follow five very clear pathways to long-term, achievable success.

The first of these is to evaluate where the enterprise sits right now in terms of its digital journey. This will differ by organisation size and industry, as well as its reliance on technology. A smaller organisation that only needs a basic accounting function or the internet for email will have far different considerations to a small organisation that requires high-end technology to manage hedge funds or drive cloud solutions. The same comparisons apply to the enterprise-level organisation. The mining sector will have a completely different sub-set of technology requirements and infrastructure limitations to the retail or finance sectors.

Ultimately, every organisation, regardless of size or industry, is reliant on technology to grow or deliver customer service, but their digital transformation requirements are different. To ensure that investment into artificial intelligence (AI), machine learning, knowledge engines, automation and connectivity are accurately placed within the business and know exactly where the business is going.

The second step is to examine what the business wants to achieve. Again, the goals of the organisation over the long and short term will be entirely sector dependent, but it is essential that it examine what the competitive environment looks like and what influences customer expectations. This understanding will allow for the business to hone its digital requirements accordingly.

The third step is to match expectations to reality. You need to see how you can move your digital transformation strategy forward and what areas require prioritisation, what funding models will support your digital aspirations, and how this tie into what the market wants. Ultimately, every step of the process has to be prioritised to ensure it maps back to where you are and the strategic steps that will take you to where you want to go.

The fourth step is to look at the operational side of the process. This is as critical as any other aspect of the transformation strategy as it maps budget to skills to infrastructure in such a way as to ensure that any project delivers return on investment. Budget and funding are always top of mind when it comes to digital transformation – these are understandably key issues for the business. How will it benefit from the investment? How will it influence the customer experience? What impact will this have on the ongoing bottom line? These questions tie neatly into the fifth step in the process – the feedback loop.

This is often the forgotten step, but it is the most important. The feedback loop is critical to ensuring that the digital transformation process is achieving the right results, that the right metrics are in place, and that the needle is moving in the right direction. It is within this feedback loop that the organisation can consistently refine the process to ensure that it moves to each successive step with the right metrics in place.

There is also one final element that every organisation should have in place throughout its digital evolution. An element that many overlook – engagement. There must be a real desire to change, from the top of the organisation right down to the bottom, and an understanding of what it means to undertake this change and why it is essential. This is why this will be a key discussion at the 2019 IDC South Africa CIO Summit taking place in April this year. With this in place, the five steps to digital transformation will make sense and deliver the right results.

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