Facebook Ends Commissions for Political Ad Sales

Date : 05/23/2019 @ 10:59AM
Source : Dow Jones News
Stock : Facebook, Inc. (FB)
Quote : 188.84  -3.76 (-1.95%) @ 12:49AM

Facebook Ends Commissions for Political Ad Sales

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By Emily Glazer and Jeff Horwitz 

Facebook Inc. said it stopped paying commissions to employees who sell political ads, as the tech giant overhauls how it engages with campaigns ahead of elections in 2020.

Once seen as a growth area, political ads are now viewed within Facebook as more of a headache, according to former employees and campaign staffers who work on digital strategies. In the wake of revelations about Russian efforts to influence the 2016 election, senior leaders at the company debated whether it should cease running political ads entirely, former employees familiar with the discussions said. Chief Executive Mark Zuckerberg made the final call to stay in the business, though changes will be made to how it operates, one former employee said.

Scrutiny of Facebook's role in the political process has only intensified over the past 18 months, with allegations that its platforms have been used for attempted election manipulation efforts on six continents.

Facebook's new approach to political ad sales is designed to eliminate incentives for employees to push a more-is-better strategy with campaigns. The ad-buying portal for campaigns is now largely self-serve, with Facebook staffers available to help campaigns register to buy ads, assist if certain ads are stuck in review and provide other basic customer service. Sales employees are no longer paid based on reaching or exceeding goals related to ads purchased promoting either a candidate or politically tinged messages in the U.S. and abroad, said Katie Harbath, Facebook's global elections public policy director.

Employees who previously could earn commissions have had their base salaries increased to compensate for the changes, said a former Facebook employee. The company declined to discuss specifics about compensation.

Ms. Harbath said the company views its political-ad business as a civic responsibility rather than a revenue driver. The company declined to comment on whether that business is profitable on its own.

The changes are in effect from national to local levels to avoid any impression that Facebook is giving any candidates or campaigns preferential treatments.

"It doesn't matter if you're running for president or running for city council. You have access to the same tools and level of support," Ms. Harbath said.

To be sure, while some presidential campaigns have noticed a change in service compared with previous election cycles, there are still some designated Facebook employees who they coordinate with beyond the self-service portal, digital-campaign staffers said.

Facebook's new political-ad model is a sharp change from the 2016 election, in which it and digital rival Google both offered extensive advertising advice to the Trump and Clinton campaigns. Trump's campaign, with a smaller and generally less experienced digital staff, took up the companies' offers to a greater degree.

Facebook staffers hired from the Republican and Democratic political worlds advised on big-picture fundraising and voter-targeting strategies. And in at least one instance, Facebook employees wrote potential Trump campaign ads, according to a person familiar with the matter and records reviewed by The Wall Street Journal. Following Trump's 2016 election victory, the campaign's digital advertising director, Gary Coby, tweeted that Facebook "helped us quickly learn path to max $$$ and message," singling out one Facebook staffer, James Barnes, as its "MVP."

Last fall, Facebook said it would no longer embed staffers in presidential campaigns.

In 2016, Alphabet Inc.'s Google held brainstorming sessions with presidential campaigns, offered them tips on rapid-response communications strategies after debates and gave candidates the ability to insert information about themselves into "cards" shown prominently in search results at no cost. Two people familiar with Google's political advertising operation said they were unaware of any plans to change the compensation structure for its employees ahead of the 2020 elections. Google declined to comment.

The market for such ads is growing rapidly: Borrell Associates Inc. found political digital advertising jumped to $1.4 billion in 2016 from $159 million in 2012. It is projected to hit $3.3 billion in 2020.

Trump 2020 campaign chairman Brad Parscale recently predicted his campaign would spend as much as $1 billion on its overall reelection effort.

Political advertising accounts for a small slice of Facebook's business, which booked more than $55 billion in revenue last year. In the 2018 midterm elections, about $284 million was spent on Facebook out of roughly $623 million on digital political advertising, according to estimates by Tech for Campaigns, a nonprofit that builds technology tools and provides tech talent geared toward progressive and centrist campaigns.

Maximizing revenue may not be the point, said Daniel Kreiss, a University of North Carolina political science professor who wrote critically about the help Facebook, Google and Twitter Inc. gave to presidential candidates in 2016.

"You're seeing a company saying that the ways they were entwined with the political field was deeply problematic," he said of Facebook. Eliminating commissions means "fewer incentives for Facebook staff to try to get the most ad spend and engagement, regardless of social costs."

In a 2017 paper, Mr. Kreiss found that Google, Facebook and Twitter approached 2016 political advertising in roughly the same fashion, with the companies offering equal support to both Democrats and Republicans. The companies viewed the work as both lucrative and politically valuable, he said.

Google and Twitter were also subject to manipulation attempts, but Facebook's size and questions about misuse of data siphoned from the platform meant it took the brunt of the public backlash.

Beginning with the run-up to the 2018 midterm elections, Facebook launched a searchable public database of political advertisements, and it now employs 500 people on election teams in Menlo Park, Calif., Dublin and Singapore.

"Our principals have been that we protect and care about the democratic process and its integrity," Ms. Harbath said. "We don't want anyone to use our tools to undermine democracy."

Last year, Mr. Zuckerberg said the company would invest in staff to manually review political ads, work that he predicted would make the business a money-loser. The company said this week its review process includes a mix of humans and automation.

Facebook's broader shift has had a beneficial impact on smaller local campaigns, which as recently as earlier this year struggled to get the company's staffers to help with glitches in the political advertising registration process, said Patrick O'Keefe, executive director of the Maryland Republican Party. That help is more available now, he said, even though many of the campaigns that he works with don't spend enough to warrant Facebook's attention.

"I don't know how you make money on some of these races," he said.

Deepa Seetharaman contributed to this article.

Write to Emily Glazer at emily.glazer@wsj.com

 

(END) Dow Jones Newswires

May 23, 2019 05:44 ET (09:44 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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