Brian Wieser: Bad behaviour makes working with Facebook harder

Marketers may think twice about the platform after revelations in The New York Times, according to analyst.

Brian Wieser: Bad behaviour makes working with Facebook harder

The state of moral leadership at Facebook, again thrown into question by a New York Times story this month, could erode trust among its business partners, distract its executives and make recruiting difficult, Brian Wieser, analyst at Pivotal Research, said.

The 14 November story revealed Facebook’s efforts to deflect public criticism, including a campaign to discredit activist protesters by linking them to liberal financier George Soros. The company posted a lengthy rebuttal to the NYT story in a Facebook Newsroom blog post.

The latest news, Wieser said, did not prompt him or his company to "alter tangible financial expectations" for Facebook. However, the revelations could have other implications for the social media giant. Customers sometimes pressure marketers to avoid associating with certain media outlets, Wieser said, and advertisers often deal with that pressure on a case-by-case basis, assessing how the association could affect sales.

"However, risks from immoral behavior at a corporate level are greater, because they create the possibility that a brand could be tarnished by association with the media owner in the future and because it reduces the trust that must exist between different parties in order to manage commercial relationships," he said.

Wieser said it’s likely that Facebook will receive more negative press in the next few months and possibly face additional congressional hearings. While that may not immediately alter the decisions of advertisers, it will have a generally corrosive effect.

"Marketers might not cut spending directly, but scrutiny of budgets on Facebook will increase, as will the time Facebook executives will spend explaining themselves the next time something goes wrong," Wieser explained. "Attracting and retaining talent to work at Facebook, who will decide for themselves whether or not morality matters and whether it matters enough at Facebook, will be yet another intangible factor for investors to consider."

Pivotal is not changing its immediate outlook for Facebook, but Wieser cautioned that the recent news "does enhance risks related to revenue and expense trends, as well as the potential for managerial changes". Pivotal is maintaining its sell rating for Facebook with a $125 price target.

Facebook’s revenue increased 33% year on year in the third quarter to $13.7bn, missing analysts’ expectations. Daily active users was were up by 9% year over year to 1.49 billion.

A version of this article was first published by PRWeek

Topics

Become a member of Campaign from just £51 a quarter

Get the very latest news and insight from Campaign with unrestricted access to campaignlive.co.uk , plus get exclusive discounts to Campaign events

Become a member

Looking for a new job?

Get the latest creative jobs in advertising, media, marketing and digital delivered directly to your inbox each day.

Create an alert now

Partner content