Turns out we understated the case. The punishments aren't informal. They're officially listed in Facebook's rules for advertisers.
The rules include a censorship system in which Facebook vets its clients' press statements ("Please allow five business days for review," it says) and a ban on clients using certain words to describe their relationship with Facebook ("partnership," "strategic" and "commitment" are on the verboten list).
And they include the ultimate punishment for violators: being banned from the Facebook platform.
Facebook is strict
Facebook declined to comment. A source previously told us that Facebook is strict with its clients because executives at Facebook have seen agencies put out press releases claiming they can use Facebook in ways "that are literally not possible." Facebook doesn't want clients to say "Facebook didn't work for us" when those campaigns inevitably fail.
Justin Sullivan / Getty Images
Facebook CEO Mark Zuckerberg
Nonetheless, this arrangement is extremely unusual in the advertising world. TV networks, for instance, don't ban their advertising clients from saying things about the business they do. Rather, ad clients are often courted like minor royalty, wined and dined, and treated to expensive seats at sporting and cultural events. Media providers almost never say bad things about their clients because, obviously, they are the ones bringing the money.At Facebook, however, the opposite appears to be true. If you want to spend money with Facebook, you have to follow Facebook's rules -- even though you are paying Facebook.
One of Facebook's biggest clients, TBG Digital, has already fallen afoul of those rules. It was stripped of its official Facebook "Preferred Marketing Developer" status sometime last fall for talking about new product tests in a way Facebook didn't like. TBG declined to comment for this story, but it continues to business with Facebook as normal. TBG's clients spend between $100 and $150 million a year on Facebook.
The removal of the PMD "badge" (as the status is known at Facebook) prevents agencies and marketers from using one of Facebook's official symbols to promote their business. The badges are fast becoming a sort of marketing shorthand for which companies have expertise with Facebook and which do not.
Not invited to the party
The loss of a PMD badge also prevents companies from joining Facebook's elite "Strategic Preferred Marketing Developers," a group of clients that get first look at new products.
In September, when Facebook first launched the SPMD list, four of Facebook's more prominent marketing clients ? Vitrue, Syncapse, TBG Digital, and Wildfire ? weren't at the launch party. Those clients represent several hundred million dollars in ad spending on Facebook, combined.
Instead, the party was hosted by Salesforce.com, a clear sign that Facebook in some way chose Salesforce over its rivals. (Bear in mind that there are more than 260 PMD companies, and they all do largely the same thing.)
The rules
Facebook's PMD rules include:
- Restrictions on using the PMD badge logo: "You must keep sufficient space around the badge so it appears clean and uncluttered."
- Press pre-approval and censorship: "...the following guidelines must also be observed when discussing the program publicly (press releases, articles, blog posts, etc.). Failure to do so may result in retraction of public materials or removal from the program. Developers are required to understand and adhere to the policies outlined below. All press releases must be sent to platformpr@fb.com for review and approval. Please allow five business days for review."
- Not abusing the Facebook name in press release headlines: "Any reference to 'Facebook' in the headline, sub-headline or lead must be used with the term 'Preferred Marketing Developer Program', relevant API (e.g. 'Ads API'), or a description of your technology."
- A ban on companies that break the rules: "Facebook reserves the right to grant or remove access to the Platform or PMD Program at its sole discretion."
Facebook's awkward history with its own clients
Michael Seto / BI
Facebook's Carolyn Everson
Clearly, Facebook has a legitimate interest in making sure that marketers and agencies don't misrepresent what they can do on Facebook.But at the same time, Facebook has a reputation of failing to deal with advertisers in a mature or encouraging way. General Motors, for instance, infamously yanked its $10 million ad budget days before Facebook's IPO, in a dispute about whether the spend was generating a proper return on its investment. And there was a time when ad agencies were dismayed that staff at Facebook wouldn't return their calls. An exec at Crispin Porter + Bogusky once complained, ?The Facebook policy is actually longer than the U.S. Constitution ? no joke.?
These are the people who generate Facebook's revenues, profits and newly buoyant stock price, and they expect to be treated with courtesy for doing so.
VP/global marketing solutions Carolyn Everson has made strides to reform Facebook from within over the past year. The company has gone out of its way to court big advertisers.
But still, punishing a client who spends more than $100 million on your platform? It's so aberrant as to be bizarre.
Currently, Facebook can get away with this because it's growing so fast, clients want to be on the platform, and there are so many PMDs competing with each other that each one lives in fear of having its access cut off. That situation won't last forever. Sooner or later, Facebook will hit the "big numbers" problem, when new ad dollars become harder and harder to attract.
At that point it may want to question the wisdom of annoying its largest clients.
Disclosure: The author owns Facebook stock.
Source: http://www.businessinsider.com/facebooks-policy-for-punishing-its-own-ad-clients-2013-1
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