What Companies Can Learn From Facebook’s Latest Reputation Challenge
There’s no doubt that Facebook has taken a financial hit from the recent advertising boycott led by advocacy group Stop Hate for Profit. As of June 27, the tally was up to $7 billion dollars in lost revenue as big spenders such as Unilever, Pfizer, and Starbucks joined the growing list of companies that have pulled advertising from the social media platform.
While the lost revenue is certainly significant, the short-term impact may not be that bad, relatively speaking. After all, the company has reported that it has nearly 8 million advertisers whose spending accounts for more than 98% of its annual $70.7 billion in revenue. Facebook pulled in over $16 billion dollars in ad revenue in the first quarter of 2020 alone.
What could really hurt Facebook is the long-term effect of its perceived reputation and the association with being viewed as a publisher of “hate speech” and other inappropriate content. Add to that, the accusations that Facebook doesn’t protect user privacy and that it allowed the dissemination of false information by Russia in the 2016 election—and you could argue that Facebook has a bloodied nose and two reputational black-eyes.
Earlier this year, a #quitFacebook movement gained steam when celebrities such as Stephen King, Cher, and Elon Musk all deleted their accounts over, as King put it in a tweet, “the flood of false information that's allowed in its political advertising, nor am I confident in its ability to protect its users' privacy.”
For his part, even Mark Zuckerberg says the current boycott is more of a “reputational and a partner issue” than an economic one.
There’s a lot Facebook and other companies can learn when it comes to proactively managing their reputation. And while the situation may seem dire for Facebook, there is an opportunity to be seized that could put it back in good standing with its stakeholders—while addressing a major global social problem at the same time.
The power of stakeholders
The fact is, this is a key societal inflection point for social media in terms of its role in promoting good citizenship and having a positive impact on political, social justice, First Amendment, and data-privacy issues. How Facebook chooses to handle this crisis could not only affect its reputation with stakeholders, but could also have a huge, positive impact on the role of other media and social media as gatekeepers of information.
The reasons advertisers are pulling their money out of Facebook are both pragmatic and philosophical. The pragmatic reason being they don’t want to run the risk that their ads might appear next to prejudiced rhetoric, hate speech, or purposely false information.
There is a certain guilt by association factor that could hurt Facebook advertiser bottom lines if they are perceived by their stakeholders—namely their customers and employees—as holding the same beliefs as the content they appear with. Simply being on Facebook at this point, regardless of the content around an ad, could associate a brand with prejudice and social injustice.
From a philosophical standpoint, saying and doing the right thing matters. In this case, brands understand that their stakeholders want to see hate speech and misinformation restricted on social media platforms.
Companies cannot make decisions based solely on shareholder interests anymore. They can no longer just be concerned by their business value. They now equally have to be as concerned by their social value, as well
How other stakeholders—such as customers, employees, and even regulatory entities—see you has a direct effect on the value of your brand and your bottom line.
Reputation, after all, is an important intangible value that defines up to 84% of the market value for a company. Furthermore, since 2006 a strong reputation has yielded 2.5 times better stock performance for companies when compared to the overall market.
Companies now need to take a position on social, environmental, and political issues that matter to their stakeholders.
Social responsibility versus the First Amendment
But Facebook faces a conundrum in this situation. And it should be given credit for the fact that Zuckerberg, Sheryl Sandberg, and the company as a whole has not shied away from it entirely.
Facebook must balance the restriction of certain kinds of speech, and the groups that propagate it, with the First Amendment. In a post dated July 7, Sheryl Sandberg made this comment about the proliferation of hate speech on Facebook:
Facebook stands firmly against hate. Being a platform where everyone can make their voice heard is core to our mission, but that doesn’t mean it’s acceptable for people to spread hate. It’s not. We have clear policies against hate—and we strive constantly to get better and faster at enforcing them. We have made real progress over the years, but this work is never finished and we know what a big responsibility Facebook has to get better at finding and removing hateful content.
It stands to reason that balancing the right to free speech with the need to remove hate speech and other forms of inappropriate content is a long and complicated process.
But this is the perfect opportunity for Facebook to get ahead of its reputational problems while driving real change in the social media space. And it can do that by engaging its community to help the company find that balance.
Because there’s no single solution that Facebook could figure out unto itself, the real solution resides in the clients and the stakeholders with whom Facebook chooses to partner.
By bringing in all stakeholders to share in the solution, Facebook would be setting a precedent in the social media space to give ownership of content to all stakeholders, and work with partners to find the best balance.
The canary in the coal mine
If you think about it, Facebook’s current woes is really a window into a larger problem that is pervasive throughout social media, and media outlets as a whole. That is, how do you regulate content to eliminate misinformation and hate speech while protecting the First Amendment rights of individuals and groups?
A Knight Foundation and Gallup study conducted earlier this year found that most Americans (65 percent) favor people expressing their views freely on social media. They do believe, however, that there are certain types of content, such as child pornography and misleading health information, that should be restricted.
According to the study, however, very few Americans trust social media platforms to police content effectively. Instead, they favor an independent board to oversee content regulations.
And this is where Facebook has a real opportunity to get ahead of this problem, become a catalyst for change, and regain its reputation with its stakeholders.
Facebook can ask the big question: How do we come together to solve a world problem? Because the larger issue isn’t really Facebook’s problem. It’s the world’s problem.
An opportunity in the making
In order to improve its reputation, win back the trust of stakeholders, and affect real change within the industry, there are some concrete steps Facebook can take.
The first is an amplification and transparency of its Governance policies. Governance defines a company’s performance on three key metrics:
Fair business practices
An open and transparent approach to business
Globally, Governance is the second most important driver of reputation. In 2020, it accounted for 14.8% of the overall weight of corporate reputation, and was closely followed by Citizenship (14.4%) as the third most important driver.
And Facebook is beginning to take action and speak to this to some extent. In Sandberg’s statement on her Facebook page, she announced that the company would soon be releasing the results of its two-year independent civil rights audit, which she says has had a profound effect on their corporate culture and the way they think about their impact on the world.
Those results have since been made public, and they have been disappointing. (The social network was faulted for “vexing and heartbreaking decisions” that affect its users.) To bring these findings full-circle, Facebook could take a hard look at its practices and publish an operating philosophy that addresses the issues.
The second step for Facebook, as I have mentioned, is to take this opportunity to bring together key players in the media to solve the overall issue. Rather than make this Facebook’s problem to solve alone, make it an issue for the industry to solve together, to embrace a sense of transparency and openness, and allow advertisers and all different voices to be represented around the table. For example, Twitter has already shown it is willing to take steps to curb inaccurate or incendiary content. Facebook could learn from that example.
After all, working with partners and sharing the responsibility is a key part of crisis management. Seeking out partnerships can provide a boost in credibility and earn a company additional goodwill.
Finally, there is one thing Facebook does really well, and that’s allowing people to connect. Facebook’s Groups functionality allows so many like-minded people to come together. Unfortunately, that also means people with racist, discriminatory, or even dangerous views can connect, as well.
To borrow a phrase from Sandberg’s own best-selling book, Facebook needs to lean into its role as a tool to provide connection and support while ensuring that it is not being used as a vehicle for hate. You cannot suppress one special interest group while promoting the other. And equally, you can’t allow special interest groups to emerge that might become world-changing, negative forces.
Key lessons from Facebook
Of course, Facebook did not take it upon itself to spread hate speech, inappropriate content, or misinformation. But it did open up an environment in which such content flourishes.
This is the time to get ahead of the problem. Rather than being reactive, which it had to be in the case of the Cambridge Analytica data breach, now is the time to be proactive in order to regain its reputation with stakeholders.
According to RepTrak research, 63% of the general public give companies with excellent reputations the benefit of the doubt in times of crisis. These same companies are also more than three times more likely to be trusted to manage a crisis than companies with average Reputation Scores.
When companies find themselves in a crisis like Facebook is in now, having an excellent reputation with stakeholders to begin with can soften the blow.
If a company’s reputation is less than excellent to begin with, as is arguable the case with Facebook, there are still measures it can take to mitigate and even improve the situation.
Recognize that there is a reputation problem, and pledge to fix it. While Facebook hasn’t been entirely transparent about how it plans to fix this particular problem, both Zuckerberg and Sandberg have recognized that there is an issue and they are working on a solution.
Put forth a solid Governance plan. Facebook has completed its independent civil rights audit. It remains to be seen if this will lead to a clear operating philosophy for the future.
Proactively get ahead of a societal problem. In this case, Facebook could seize this as an opportunity to come together with its partners, other social media and media outlets, and the general public to put together an advisory committee and a common charter to self-regulate content and balance the right to free speech with the clear laws against speech that incite violence, hate speech, and other unconstitutional content. This will be especially relevant given the coming election and the possibility of the same kind of content we saw in 2016 popping up.
This moment in time could be a turning point for content providers and their advertisers, and Facebook could be the company to bring it about. In a crisis like this, it’s imperative for companies to take a moment to understand the larger issue at hand and to take action not only to mitigate the problem for themselves but to become the change that stakeholders want to see.
Companies must be authentic in those actions. Because it’s not enough to sound authentic. Your actions have to back up your promises. It’s those kernels of authenticity that will give stakeholders a reason to believe platforms like Facebook are doing all the right things.
Stephen Hahn-Griffiths Executive Vice President The RepTrak Company