How Meta’s Free-Speech Turn Is Shaking Up the Ad Business
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Welcome to Tech News Briefing. It's Tuesday, February 4th. I'm Pierre Bien-Aimé for The Wall Street Journal. For the better part of a decade, Meta's relationship with possible advertisers was based on its efforts to combat hate speech and misinformation on its social media platforms, Facebook and Instagram. But a new cultural moment has arrived, punctuated by President Trump's return to the White House, and Meta's executives have a different message. Some things we used to remove will now be allowed.

And that has some advertisers concerned. Advertising and marketing industries reporter Suzanne Vernizza tells us there's a big shakeup in the relationship between social media giants and Madison Avenue, the center of the U.S.'s advertising industry.

So, Suzanne, what's changed over at Meta, both concretely and in its messaging? What Meta announced recently was they basically made this big pivot. They have decided to eliminate U.S.-based fact-checkers, and they're going to replace them with community nodes. Think of what happens on X. That's a crowdsourcing system that basically allows users to flag posts that they think needs more context.

And you see them all over X right now. So they're moving away from this. And Zuckerberg basically wants this to be to loosen up all the restrictions that he sees on free speech on Facebook and Instagram.

And that's got advertisers really worried right now, because that means if more and more sort of ugly or controversial or things that they find unsuitable appear, then there's more of a chance that their ads may appear next to those types of things, which is something they want to avoid. And that's something that they refer to as brand safety, not having your ads appear next to some material that could be considered offensive.

According to some advertising insiders, that's become a political issue. How so?

It's become a real lightning rod. This really all came to a head last year in a really big moment where a bunch of advertisers, specifically an ad trade group, was called on the carpet by the House Judiciary Committee, which was chaired by Ohio Republican Jim Jordan. He basically ran an investigation and he issued a detailed report

in July that basically said that this trade group and a bunch of its members may have violated antitrust laws by withholding ad spending from social media platforms and conservative media outlets.

That had significant ripples in the ad business. And subsequently, Elon Musk has filed a lawsuit against a bunch of advertisers as well and an advertising trade group. Big brands like Mars, CBS Health, and a bunch of others basically have been added to this lawsuit, and it's basically spreading fear across Madison Avenue now. Yeah, and over the weekend, we reported that X has added more major brands to its lawsuit, including Nestle and Colgate.

How have advertising agencies responded to this charge that this is a political concern they have? So they're really worried. Quietly, they're all trying to decide what they do. Some are returning to X platform a little bit. But what they really are concerned is there's tools that they have enrolled and basically longed on to for the last, I

I would say, five years and they've gotten better. And these are tools that are technology ad tech products that allows them to keep their ads away from content that they don't want. They include things like they can enter a list of words that they think are unsafe, like it's terrorism or violence or fire or death. And those words are entered into a system. And then anything that has those words or terms, an advertiser can stay away from.

Meta has been hosting meetings in person, virtual meetings, calming advertisers down and saying, we're not going to take away these tools. Now, some advertisers are finding a little comfort in that, but there's this broader worry because if a platform goes really south, like it's not just about keeping my ads from being adjacent to something that consumers might find offensive, the bigger worries of if the platform becomes very,

predominantly negative or controversial, then there's an overall rub because they feel like consumers will then see it as you're endorsing that platform and what it stands for. So that's what this is lathering up to. The fear that this might disintegrate all of the content on

whether it's Facebook or Instagram, and then they're left with making a hard choice about do they place their ads if there's a negative connotation in people's minds about those platforms and does that affect their brand? Coming up, does Meta need big advertisers more than big advertisers need Meta? That's after the break.

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Suzanne, can you give me an example of what brands mean by brand safety and how that might look on Facebook or Instagram? Meadow, when they were talking to advertisers, gave examples. For example, a statement like women should not be allowed to serve in combat would have been prohibited before because basically they decided that excluding people from a job based on their gender is not permitted. But now is.

And that means for an advertiser, they don't want to be associate with anything to do with that. If a post says that, so what,

But now what happens is the onus is on the advertiser and they now need to make sure when they're doing their placements and using those ad technologies that I talked about, they basically have to make sure that in those technologies, they are very specific about what type of content they don't want their ads to appear near. So they might have to put in words like one.

women, combat, war, and hopefully that would then keep their ad from appearing near that particular post. And what did Meta say in response? The Meta spokesman that we talked to pointed out that his company has been very aggressive with sharing information online.

with their advertising partners and that basically they wanted to alert them that the advertisers, that they were standing behind brand safety and that they were making sure that the tools that they offered them were still going to be in existence. Just how important is meta for big brands, for small brands? That is the bigger problem here. Advertisers, specifically the large advertisers, and most advertisers,

have become so dependent on meta and their platforms. They have the most amazing targeting capabilities. They know everything about their consumers. So it performs super well. They basically are the second largest digital ad company in the US behind Google for that very reason. They had over $130 billion in ad revenue in 2023. So average

Advertisers, they can't come off of it. So there was a big boycott of Facebook a couple of years ago and advertisers came off for a month because of this very issue. There were plenty that actually went back immediately because they couldn't live without it. So this is a tough choice and that's why we're not going to see a lot of them run for the hills. I will say you're going to probably see advertisers say, maybe I don't rely as heavily on Meta if it goes south. Well,

What about on the flip side of that? How important is advertising funding for Meta? It's huge. It's the bulk of its revenue. But what the secret is with Meta is as much as they have done to reassure these big brands, they don't really need the big brand advertisers.

They have limited power because meta is insulated to a great extent because they make the majority of their ad revenue from the tens of millions of little advertisers and small businesses that use that platform. Suzanne, you covered a similar story last week and you mentioned it earlier. Amazon is ramping up ad spending on X specifically after pulling much of that advertising over a year ago. So how is the overall relationship between brands and social media shifting?

Brands have had a love-hate relationship from the get-go with social media, and they had made a lot of ground with all of them. It was a tug-of-war for many years about getting them to take control of the content that's on their platform and make sure that their ads were safe.

They're realizing that the game is over now and they don't have the leverage that they once did and they're coming to terms with it. But they're faced with tough decisions here and they are very worried about the blowback. They don't want to be seen as they don't believe in free speech, but they would argue this has nothing to do with them free speech. Their argument is if a platform wants to be free speech, that's fine. But it has to also satisfy an advertiser because that's the product. They sell ads.

they could easily switch if they didn't care about the advertisers and really wanted free speech, then charge subscriptions. But advertisers have a say because much of these platforms, the biggest revenue comes from advertising. That was a reporter, Suzanne Vernizza. And that's it for Tech News Briefing. Today's show was produced by Julie Chang with supervising producer Catherine Millsop. I'm Pierre Bien-Aimé for The Wall Street Journal. We'll be back this afternoon with TNB Tech Minute. Thanks for listening.

ADP knows any big thing, any small thing, any trendy thing, even a trendy thing that everyone knows isn't a great idea, but management just wants us to give it a try for a bit can change the world of work. From HR to payroll, ADP designs forward-thinking solutions to take on the next anything.