Consumer products giant Proctor & Gamble cut $140m from its digital advertising budget in 2017 after brand safety concerns arose when its ads were placed next to online content of suspicious origin. Social media companies took notice, for bottom-line impact, for sure, but also as the message took firm root that facts and truth matter.

At the same time, the economics of ‘fake news’ is an emerging and rapidly expanding area of both academic and commercial inquiry. Researchers from the Yale and Massachusetts Institute of Technology business schools are already algorithmically analysing data sets of fake stock promotion articles prosecuted by the US Securities and Exchange Commission (SEC). Their initial findings reveal that fake news has a price impact on small cap companies with high retail ownership but not a particularly significant impact on large enterprises.

And while this is only one metric of the tangible cost fake news has on business, the study notes that the prevalence and impact of fake news from crowd-sourced origins continue to grow and generate attention and concern in the financial markets. Markets are most vulnerable when real-time information costs are high and the ability to take corrective action immediately is limited.

With today’s virtually unregulated digital domain, in which opinion, identity politics and situational truth trade as fact, the language of business where conversation is currency cannot survive without a re-grounding.

This crisis reflects myriad causes but has one profound effect: facts are less important to Western society than any time in at least modern history. Though propaganda and disinformation campaigns have long punctured human history, we have never witnessed the mass exodus from a common set of facts that enable transactional discourse worldwide. Without a committed front to restore the foundational value of facts and truth, we may well be forced permanently into the perilous waters of ‘situational facts’ and selective truths. This will trigger an enormous tax and tangible cost on business.

Jan-Mar 2019 Issue