Facebook, which along with Google is responsible for about 60% of online advertisers’ spending, has consciously built part of its surprising success with incorrect data, claim recently opened court documents. In fact, this can pose a problem for a company that generates more than 90% of your revenue from selling ads.
In short, this class action, which was first filed in 2018, claims that Facebook massaged the “Potential reach” numbers – an estimate that Facebook gives its advertisers as to the number of people who can see their ad – to incite advertisers to spend more money on the platform, all in the hope of reaching the people that Facebook had promised. These records detail that some of Facebook’s top executives, including chief operating officer Sheryl Sandberg, were fully aware that the company had spent years exaggerating the number of eyes its advertisers could reach.
How first reported by the Financial Times, the lawsuit says that when ordinary Facebook employees proposed internal corrections to these inflated numbers, top executives repeatedly rejected them, claiming that their solutions would cut the company’s advertising revenue, which was important.
Thanks to these unsealed files, we know how inflated some of those numbers were. Here’s an example: in 2018, Facebook said its advertisers that it had a potential reach of 230 million adults across the U.S., out of the 250 million adults that were counted by U.S. census data that year. But according to a 2018 Pew Research Study, only about 68% (or 170 million adults) actually use the platform. Sandberg acknowledged in an internal email that “she has known about problems with potential reach for years”. But she repeatedly rejected attempts by officials to rectify those numbers, according to the lawsuit.
Internally, employees recognized that while the product earns
itself as an estimate of how many “people”Your ad can reach, is, at best, an estimate for the number of accounts, including the countless number of fakes and duplicates. Some employees even made the numbers in 2018, just to see what would happen if known duplicate accounts were excluded from potential reach and saw a 10% drop in numbers provided to advertisers. Facebook chose not to cut them. When one of the potential reach team’s product managers later suggested adjusting the way they talked about these numbers – like, say, replacing the word “people” with the word “accounts” – his suggestion was rejected for concerns about the “significant” “Impact it may have on Facebook ad revenue. According to the process, the manager replied that” it is a recipe that we should never have obtained, since it is based on wrong data “.
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In many ways, this case reflects another high-profile advertising process that hit the company in 2016, claiming that Facebook consciously retained some serious issues with your video ad metrics in order to get more money from these video ad partners. In 2019, Facebook hit the order for an amount of $ 40 million dollars, which, as others have noted, is quite dumb change for a company that wins tens of billions dollars in ad revenue per year.
And apparently, Facebook didn’t learn much from that slap on the wrist. When it comes to ongoing problems with Potential Reach, the process points out that the numbers that Facebook continues to give to its advertisers make even less sense, like telling them that it can reach “100 million” young people aged 18 to 34 years all over the country. Census data show that there is indeed only 76 million theirs – and we know not everyone uses Facebook.
Both in section is at your own website, the company argued that these metrics should be interpreted as estimates, not true. But internally, according to the new documents, the company admitted that Potential Reach was “arguably the most important number” that advertisers trusted when deciding whether to put their money on advertising on the Facebook platform in the first place.
We contacted Facebook to comment and will update here when we have a response.