Facebook to Leverage “Authentication” to Drive Ad Revenue?

Facebook to Leverage “Authentication” to Drive Ad Revenue?

For comic relief I watched some of the Facebook congressional hearings (video below). While Facebook’s Calibra/Libra cryptocurrency initiative was the hearing’s focus, clues were offered as to what may lie ahead for Facebook users and Ad buyers.

At the 6:24:30 mark of the video, U.S. Representative Dean Phillips (D-MN), asked Facebook founder and CEO Mark Zuckerberg if political ad buyers would be able to purchase political ads with Libra (the concern being that bad actors could anonymously purchase ads to influence election outcomes or execute illicit trade). In the exchange Zuckerberg shared that Facebook over time would work to validate not just political ad buyer accounts, but general user accounts on Facebook’s platform by way of a government issued ID or other means. This authentication effort would extend beyond Libra to Facebook’s general user population.

This validation effort would undoubtedly add cost and friction to the user experience, yet it would enable Facebook to command a premium for Ads targeted to validated users. One of the biggest issues that we have with Facebook’s reported financials is that investors have to take the company’s word as to how many active users are on the platform. This at a time when Facebook purges more invalid accounts from its platform in a given quarter than the number of active users on the platform.

Ad buyers must also deal with the user authentication issue in that some ad dollars are deployed and wasted on fake accounts.

While a Facebook account validation effort may be too “Big Brother” for some, if it does occur it will to a degree alleviate investors’ and Ad buyers’ concerns over user authenticity. From Facebook’s perspective it will provide the company with an edge over Google in the Ad Wars.