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Instagram’s crisis highlights the bigger issues the entire ad industry is facing



Hi! The Golden Arches are getting a makeover! (Sort of.) McDonald’s has been tight-lipped with details about its new restaurant concept, CosMc’s. Here’s what we know so far.  

In today’s big story, we’re looking at why Instagram is having a tough go of it after a series of damning reports.

What’s on deck: 

But first, Reels is reeling.

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The big story

Insta algo issues

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The past few days have not been kind to Instagram.

First came newly unsealed documents alleging Meta, the app’s parent company, knowingly has millions of users under the age of 13 on Instagram

The complaint, filed by 33 states and first reported by The New York Times, also claims Meta protected the information from being disclosed to the public.

Things only got worse when a Wall Street Journal report detailed how Instagram’s Reels, its short-form video platform, pushed “risqué footage of children as well as overtly sexual adult videos” to accounts following children influencers on Instagram. The content also appeared alongside ads from major brands, according to tests conducted by WSJ.

Business Insider’s Katie Notopoulos has a rundown on how a relatively scandal-free summer for Meta has erupted into a full-blown crisis at Instagram

The concerns raised over Reels couldn’t come at a worse time. Executives highlighted successful monetization efforts for Reels during Meta’s most recent earnings report. UBS also noted Reels was even outperforming TikTok

And the fix for Instagram’s Reels might not be simple or one Meta’s willing to make.  

Trying to stop Instagram from recommending harmful content to people interested in it requires “significant changes to the recommendation algorithms that also drive engagement for normal users,” the WSJ reported, citing conversations with current and former Meta employees. 

Meanwhile, company documents indicated Instagram’s safety staffers “are broadly barred from making changes to the platform that might reduce daily active users by any measurable amount,” WSJ also reported.

Instagram app logo in front of a purple background and dollar signs

Instagram, Tyler Le/Instagram

The WSJ’s report illustrates a broader issue the ad industry is grappling with.

On the one hand, much attention has been given to ensuring ads appear with the right content

The problem has gotten so big that two companies focusing specifically on brand safety — Integral Ad Science and DoubleVerify — have grown in prominence, Lauren Johnson, Business Insider’s senior advertising reporter, told me. 

But at the same time, advertising agencies are under incredible pressure these days, Lauren added. Ad spend has never fully recovered since the onset of the pandemic, meaning companies have to do more with less. 

That’s why generative AI tools are considered significant for the industry. (Here’s a rundown of 12 interesting startups in the space.) 

But, handing control over to AI comes with risks. 

Meta and Google are both investing heavily in AI tools. Google’s Performance Max, which uses AI to place ads, has frustrated some agencies because they can’t control where Google’s AI decides to place ads, making it hard to track and measure, Lauren previously reported.

All of that puts the ad industry in a juxtaposition. Be as efficient as possible with a limited budget while not handing over the reins to technology it doesn’t fully understand or control.

3 things in markets

Joe Biden

President Joe Biden delivers remarks about his administration’s approach to artificial intelligence during an event in the East Room of the White House on October 30, 2023, in Washington, DC.

Chip Somodevilla/Getty Images

  • The markets are betting against a recession. US states’ economies tell a different story. Over the past three months, 27 states have seen their economies shrink compared to only 16 states exhibiting growth, according to data from the Philadelphia Federal Reserve. Here’s who is up and down.

  • These charts show why defaults are on the rise. Economists at Apollo Management said a default cycle has started. These charts outlining the bankruptcy filings and the share of high-yield bonds maturing show how severe the situation is

  • Bank of America says rate cuts are coming. The bank predicts the Fed will cut interest rates in the middle of 2024. It’s also bullish on the Fed’s plan to nail a soft landing, avoiding a recession entirely.

3 things in tech

A Microsoft logo is being shattered, with the Israel and Palestinian flags overlaid on top.

Chelsea Jia Feng/BI

  • Inside Microsoft’s war over the war in Gaza. Internal Microsoft posts and emails reviewed by BI offer a window into the anger and vitriol that workplaces across America grapple with as the war escalates. Microsoft has actively attempted to regulate the internal debate. But its moves have only further inflamed tensions.

  • Meet the Climate Action 30. These are 30 of the top global leaders working toward climate solutions in 2023. The list includes academics, scientists, activists, influencers, corporate executives, entrepreneurs, and other industry leaders.

  • Broadcom lays off VMware employees after closing its $69 billion acquisition. Some employees learned on Monday that their positions would be eliminated. Before the deal closed, VMware had already started cutting jobs.

3 things in business

online survey job interview checklist questionnaire

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  • The three things you should lie about during your job interview. A recruiting manager warned candidates to think carefully before answering these three questions: Why did you leave your last job? Why do you want the job? And where do you see yourself in the future?

  • Think carefully before you relocate for a new job. An Amazon senior leader warns people that they might regret relocating. The company you’re making the risky move for might not appreciate the sacrifice you made — especially during layoffs.

  • Here are four things that set disruptive go-getters apart. A major takeaway is that there’s no one path to success. But common threads include that who you hang around matters and that building something isn’t glamorous.

In other news

What’s happening today

  • It’s Giving Tuesday. The global observance is meant to celebrate generosity.

  • Happy National French Toast Day. It’s meant to honor the breakfast dish and encourages people to eat it whenever they want.

  • Earnings today: Intuit, CrowdStrike, Hewlett Packard Enterprise, and other companies.

For your bookmarks

Costco holiday recs

Producers eggnog; Gingerbread house kit at Costco

Veronica Thatcher

Costco employee shares the 10 things they’re buying from the wholesaler this holiday season. Her shopping list includes the Modern Gourmet cocoa caddy and Squishmallows ornaments.

The Insider Today team: Dan DeFrancesco, senior editor and anchor, in New York City. Diamond Naga Siu, senior reporter, in San Diego. Hallam Bullock, editor, in London. Lisa Ryan, executive editor, in New York.

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