Advertising industry worries Facebook response to user-privacy crisis will prop up a digital marketing duopoly.
Facebook is putting tighter controls on data flowing through its giant social network in response to the worst privacy crisis in its history. Rather than hurt the company, this will ultimately give Facebook and rival Google more power over a digital advertising market they already dominate, industry executives and analysts say.
“The elimination of third parties is smart strategically,” Morgan Stanley analysts said this week. They expect no “material reduction” in spending on Facebook and, over time, the company will net more ad dollars by avoiding industry middlemen.
“Facebook is raising the walls around its garden,” Morgan Stanley’s Brian Nowak wrote. “The two largest online ad platforms will now be more aligned, focusing on their first-party data offerings and tool sets which we expect to enable Facebook and Google to continue to drive 90%+ of the online ad market.”
Others were less enthused. “Facebook’s announcement amounts to an insidious head fake,” Axciom director John Battelle wrote in a blog post. “Facebook is planning to profit from a scandal of their own making.”
By making it more cumbersome to use outside data sources, Facebook can exert more control in the ad-buying process and keep some insights about consumers hidden from marketers, said Michael Horn, a managing director at ad agency Huge. “They can claim privacy while moving advertisers more deeply into their own systems.”
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