Dive Brief:

• Advertisers are expressing vocal frustrations about Facebook following a bombshell report The New York Times published Wednesday that detailed, among other things, how company leaders like COO Sheryl Sandberg worked to shift blame away from the platform in the wake of several high-profile scandals. Following up on its report, the Times spoke to executives at several large ad agencies, including Publicis Groupe's Chief Growth Officer Rishad Tobaccowala, who said the findings could be "the straw that breaks the camel's back" in driving advertisers away from Facebook.
• Tobaccowala said Facebook has "absolutely no morals" in its quest for growth, which has been driven by executives like Sandberg, who oversees the company's ad business. After the more recent Times article ran, Tobaccowala called the paper to clarify that he believes Facebook, the company, and not the specific people that work there, has lost its moral compass.
• Negative sentiments were shared by others in the industry as well: Creative agency R/GA, for example, tweeted a link to the initial Times article with the added comment: "It's time to admit we were all wrong about Facebook. It's actually worse." Rob Norman, a senior adviser at WPP's GroupM division, recommended that Facebook create an ombudsman role to improve its accountability and assessment of societal risk. Simulmedia founder and CEO Dave Morgan told the Times that discussions among advertisers about Facebook have become more heated, with some "saying that time for just talking is over."

Dive Insight:

Facebook losing the faith of more advertisers comes at a critical juncture for the social network and the marketing industry at large. Marketers are feeling greater pressure to be accountable for things like brand safety and transparency as the state of the digital advertising ecosystem continues to prove a mess, and are at the same time seeing the benefits of taking stronger political and social stances with consumers. They've been eyeing Facebook with a greater degree of scrutiny amid repeated stumbles and scandals in recent years as well, which means the current level or rhetoric and distrust could be more strongly reflected in their spending. 

Facebook still derives the bulk of its revenue from advertising and remains the second-largest digital ad platform in the world behind Google. However, any sort of exodus of advertisers from Facebook heading into 2019 could weaken the platform, which was already maturing prior to its current PR headaches and has begun to see a long-expected slowdown in revenue growth, spurring it to double down on more nascent ad formats like the photo and video collages called Stories.

The key question now is whether brands and their partners like agencies will be all talk or take some concrete action. This hasn't occurred to any significant degree for prior Facebook scandals around Cambridge Analytica, Russian election meddling and fake news or the revelations that the platform grossly overinflated video marketing metrics. Some industry heavyweights, such as Procter & Gamble, have ramped up calls for third-party verification for metrics, but mass brand boycotts or spending freezes have been rare. What might be different this time is the inability for Facebook to pin the controversy on third-parties, bad actors or smaller oversights, which has led to broader discussions about the quality of leaders like Sandberg or founder and CEO Mark Zuckerberg.

Significantly, the new Times report was centered on agencies and not brands, which, as the publication notes, are the ultimate decision-makers on where ad dollars go. Agencies also occasionally compete with Facebook for brand dollars, which means they could have a more vested interest in gaining leverage over the site. Marketers who have pushed back against platforms that sew division in society like Unilever did not return the paper's request for comment. The most vocal source in the piece, Publicis' Tobaccowala, called the Times back to restate his thoughts around Facebook's lack of morals after the story ran.