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By Suzanne Vranica 

Russia's alleged interference in the U.S. elections, the spread of fake news on social media and the recent Facebook data scandal are all contributing to the distrust that people world-wide have developed for social media, according to a new study being released Monday.

Edelman, the world's largest independent public-relations firm, was prompted to field new research to figure out why people's trust in social-media platforms was declining.

The firm's annual Trust Barometer study in November had found only 41% of the people around the world trusted social media as a source for general news and information, down from 47% in 2015. The fallout in the U.S. was more pronounced with only 30% trusting the platforms , down from 35% in 2015.

Almost 70% of the study participants pointed to identity scams, cyberbullying, hate speech and fake news among the reasons for their low confidence in social-media sites.

The new study, which polled 9,000 people in nine countries, also found that 60% of people don't trust social-media platforms to manage the information they collect about consumers responsibly -- a fallout likely attributable to the Cambridge Analytica scandal. The U.K.-based data firm allegedly obtained data improperly on tens of millions of Facebook users.

Potential fallout

In recent years, advertisers have come to rely heavily on social-media sites such as Facebook to help them reach their customers to sell their goods and services. Privacy concerns and the lack of trust could have implications for brands if consumers' trust falls so low that people pull back on sharing or using social-media sites.

So far, the crises haven't dented Facebook's ability to attract new users or ad dollars. Its first-quarter revenue rose nearly 50% from a year earlier to $11.97 billion. Moreover, advertisers are expected to increase their spending on social-media ads in the U.S. by 17% this year to $25.24 billion, according to eMarketer.

Still, consumers want the issues fixed. "People want the platforms to change," and it is in the best interest of "brands to demand that change, " says Richard Edelman, chief executive of Edelman.

Many of the people polled said brands -- the companies that support social-media platforms with their ad dollars -- should use their influence and pocketbooks to force change, the research says.

About 70% said brands should pressure social networks to do more to combat fake news, while 71% agreed brands should also play that role in ensuring personal data is protected and used ethically.

People "are looking to brands to incentivize and compel social-media companies to change," Mr. Edelman says. He points to how the video giant YouTube made changes to its service after major brands such as Procter & Gamble Co., PepsiCo Inc. and HP Inc. boycotted the site after ads appeared adjacent to inappropriate content. YouTube is part of Alphabet-owned Google.

In February, Unilever PLC, one of the world's largest advertisers, threatened to pull back on advertising on YouTube and Facebook if the companies didn't do more to combat the spread of fake news and divisive content.

With regard to government intervention, 62% of those polled agreed that governments should do more to regulate social media. People in the U.K., China and India were among the most supportive. Some 73% of Indians agreed government should do more, compared with 71% of Chinese and 68% of Britons. In the U.S., 48% of respondents agreed.

The Cambridge Analytica scandal has only added to growing scrutiny of technology companies by regulators around the world. Many regulators are looking to Europe for direction on how to pressure firms over their privacy policies, market power and other issues. In Europe, sweeping new privacy laws known as the General Data Protection Regulation came into effect in late May.

The issues currently facing social-media platforms -- in particular, consumers' growing concern with the use of their data -- pose a worrisome trend for digital marketers and for the platforms themselves. Digital marketing rests largely on marketers' ability to harness consumer data to better target and craft relevant ads. Marketers, tech companies and ad agencies have long touted that consumers are willing to surrender some of their personal information so they can be served more personalized ads.

Rethinking the trade-off

However, the Edelman study suggests that consumers may no longer be amenable to such a trade-off. The problems "are now calling into question the things marketers have taken for granted," Mr. Edelman says. "In a sense we are going backwards because of the perceived violation of people's rights."

Almost half of those polled said they were not willing to sacrifice some of their data privacy in return for a more personalized shopping experience, though younger people were less opposed: About 41% of people 18 to 34 years of age were willing to fork over some data for more personalized pitches.

Some people also expressed concern with some of the marketing practices that have become a standard part of the digital-ad ecosystem. For example, 47% said it wasn't OK for companies to use cookies, the tiny pieces of code that marketers deploy on web browsers to track people's online movements, to remember them and what they like. More than half of the people polled weren't OK with companies learning their interests by tracking websites they visit. And more than half also weren't eager to have companies use location information from a person's mobile phone to offer discounts at businesses nearby.

With consumers now questioning how their personal information is being used, brands must be "more transparent with what data they are collecting and how it's being used," says Mr. Edelman. "People don't want some little box on the bottom of their screen that gives away their rights on data privacy."

Ms. Vranica is a Wall Street Journal news editor in New York. She can be reached at suzanne.vranica@wsj.com.

(END) Dow Jones Newswires

June 18, 2018 05:14 ET (09:14 GMT)

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