A recent study showed that misinformation on Facebook (FB +1.97%) gets clicked six times as often as factual material, but Facebook has endured plenty of similar criticism before.
In this segment of, "The Five," recorded on Sept. 3, Fool contributors Jeremy Bowman, Brian Withers, and Toby Bordelon discuss the implications for the negative press on Facebook, and why the business can resist the challenges.
Brian Withers: Let's jump to number 3, Facebook is in the news. It must be positive stuff, that Facebook is saving the world.
Jeremy Bowman: [laughs] It always is, right?
Withers: [laughs] Facebook is never in the news for good stuff. This time it's a study from NYU that says misinformation on Facebook and other social media platforms gets clicked six times more often than factual news. Wow. Not surprised, but thinking about this in terms of Facebook, not necessarily. This really has a ripple effect. I'm thinking about Facebook's customers. Not just for the social media platforms, but all of those like Nike that spend money with the social media platforms. Jeremy, you are up first with this one. Do you think Facebook and others' inability to keep fake news off the air, will slow down the pace of digital advertising on the Internet?
Bowman: Yeah. I think we'd all like to see this problem solved, but the reality is it just seems so entrenched. There's YouTube and all these platforms that have the same problem. I think what's interesting about that question too is that we saw this play out in real-time last year. I recall, after the George Floyd killing, there was a pretty large boycott against Facebook that was called, don't stop or, sorry, I don't know, no profit for it or something like that campaign. Stop profit for it maybe. But this got a lot of big corporations to sign on. If you recall, there was a big social movement broadly with a lot of companies back then. Coca-Cola, Verizon, Clorox were some of the big names that took spending out of Facebook for months. I think from the perspective of the boycott organizers, it was a huge success. They got a ton of media coverage. A lot of companies they asked to boycott. Facebook did exactly that, and it still only put maybe a dent in the company's growth. I think their third-quarter revenue was up, I want to say 20-25 percent. Maybe some spending went to some of their rivals like Pinterest or Snapchat [of Snap, Inc]. I think at one point, Mark Zuckerberg was like, they'll be back, don't worry, [laughs] to investors. I think there's not a lot of other places to go and I don't know if there's, as far as the fake news, anywhere you can go that won't have this issue in somewhere. We see it on Twitter too. I think in Facebook, it's just so dominant, they really just become a utility in so many ways with something like three billion users around on all their properties. It's hard to get away from them both as a user and an advertiser.
Withers: Toby, how about you, man?
Toby Bordelon: I don't know where advertisers would go. I mean, look, the customers are online, the shoppers are online. Even if you're going to buy in-person, most people tend to do some of their research online, fresh offering, like that's where they are. Advertisers have to be where the shoppers are. There's really no choice. Whatever you think of Facebook or some of these online companies, today, if that's where people are hanging out, that's where advertisers are going to be, one way or the other.
Withers: If it's not you, it's your kids, right?
Bordelon: Yeah. Because think about it, if you're an advertiser maybe you make some noise about, there's some controversies are like, we don't want to pull our ads on for like a couple of weeks, maybe, [laughs] or a couple of months at most, but you want customers, if that's where the people's eyeballs are, you've got to put your ad in front of them, if you don't, your competitor will. I think that's just a reality. The other thing to think about and similarly, if something is controversial, that means a lot of people are probably engaging with it and as an advertiser, that's where you want to be. You've got to walk a line, but the sites that are controversial and generate the most traffic go there, that's where the people you're selling to are.
Withers: For Toby, no press is bad press. There you go. Well, I'm going to take a poke at my friend, Matt Frankel here, who would say, well, what about Boston Omaha's billboard business? [laughs] I hear you, Matt, but I'll go back to Toby. Where are the consumers? This is a train that has left the station and it's not coming back. There is nothing that's going to slow down online advertising, programmatic advertising, advertising on digital TV. The whole world is moving from the way we used to do advertising to the future state where we have targeted focused advertising and we know stuff about you and we're going to use that stuff that we know about you to at least get you to see and interact with the things that we think you'll like. Interesting. I remember when Zuckerberg was like, yeah, they'll come back. He's right. [laughs] He's totally right.
