Both Facebook and Youtube (owned by Google) seem to have big problems with matching user generated content with brands interested in advertising their products.
In fact, as Karen Webster of Seekingalpha records, Procter & Gamble and Unilever, two of the biggest brands globally “have already voted with their pocketbooks and put digital platforms like Facebook and YouTube on notice, suggesting they’ll be back when they’re satisfied changes have been made.”
Indeed, Marc Pritchard, Chief Brand Officer of Procter & Gamble, has publicly stated that:
As we all chased the Holy Grail of digital, self-included, we were relinquishing too much control—blinded by shiny objects, overwhelmed by big data, and ceding power to algorithms
One of the examples cited are a series of viral videos that were promoting the so-called Tide Pod challenge, where teens were eating the concentrated liquid laundry detergent pods. Tide is a product and brand owned by P&G.
Pritchard also added that
too many ads were being “seen” by bots that couldn’t buy or influence anyone – and not by real consumers who can and do buy products.
Who will profit of these weaknesses? According to Webster, it will be Amazon Ad business and Google search.
As she points out:
Those are the digital platforms people visit when they’re in the mood to buy something or think they might want to buy something. That consumer intent – to buy something – is what Amazon and Google’s search business monetizes.
Both services have a short way to close the loop between advertising and purchase. Indeed, with the introduction of digital assistants like Alexa/Echo and Google Home, this loop will become even shorter.
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Artificial intelligence is still in its infancy and user generated content is still not easy to manage. As a result, both Facebook and Youtube are being forced to supervise user generated content with an increasing number of human employees.
Investors should be cautious too. We will soon see how this new army of employees will impact the profitability of both servicers, until they learn how to make machines better than humans at some sides of that task.
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