Facebook Accused of Exaggerating Its Reach For Advertisers

Facebook, like many tech companies, has had a history of reputational challenges.

But exaggerating metrics in an era of painstaking quantitative analysis and transparency suggests both an overweaning corporate ambition and, perhaps, an arrogant disregard for some of the realities of the world it has, itself, created. JL


Sapna Maheshwari reports in the New York Times:

Facebook’s Ads Manager says it can potentially reach 41 million 18- to 24-year-olds in the United States and 60 million 25- to 34-year-olds. The catch: the census counted just 31 million 18-to-24-year-olds last year and 45 million 25-to-34-year-olds. The census figure discrepancy is likely to be a setback for Facebook with advertisers and a boon for outside measurement companies like Nielsen and ComScore, particularly as Facebook vies to make video advertising a bigger part of its business

Facebook faced criticism on Wednesday after an analyst pointed out that the company’s online advertising tools claim they can reach 25 million more young Americans than the United States census says exist.

The analyst, Brian Wieser at Pivotal Research, said in a note Tuesday that Facebook’s Ads Manager says it can potentially reach 41 million 18- to 24-year-olds in the United States and 60 million 25- to 34-year-olds. The catch, according to Mr. Wieser: the census counted just 31 million 18-to-24-year-olds last year and 45 million 25-to-34-year-olds.

“The buyers and marketers I talked to were unaware of this and they are using it for planning purposes,” Mr. Wieser said in an interview. “Buyers are still going to buy from them and plan for them, but this is something that doesn’t need to be an error and puts every other metric they might provide into question.”

The criticism over audience figures comes as Facebook disclosed on Wednesday that hundreds of fake accounts apparently based in Russia had purchased $100,000 worth of political advertising during the American presidential election last year; the tech firm said it had shut down the accounts. The census figure discrepancy is likely to be a setback for Facebook with advertisers and a boon for outside measurement companies like Nielsen and ComScore, particularly as Facebook vies to make video advertising a bigger part of its business, Mr. Wieser said. Mr. Wieser is one of two analysts with a “sell” rating on Facebook shares, compared to 42 “buy” recommendations and three “hold” ratings, according to data compiled by Bloomberg.

Photo

A screenshot of how Facebook shows potential audience size to advertisers.

Facebook said on Wednesday that the numbers are not designed to match census and population estimates, noting its figures are self-reported by users and include non-residents. The estimates are based on “Facebook user behaviors, user demographics, location data from devices, and other factors,” the company said in a statement. “They are designed to estimate how many people in a given area are eligible to see an ad a business might run.”

The mismatch is significant because the 18- to 34-year-old demographic is the most lucrative for marketers, and one that Facebook promotes given the group’s broader trend toward cord-cutting and ad-blocking. Linda Yaccarino, the head of advertising sales for NBCUniversal, shared a screenshot of Mr. Wieser’s note on Twitter, remarking, “If my kid distorted the facts like this on her college thesis, she’d be expelled.”

Over the last year, Facebook has disclosed a host of measurement errors around how long and how often people watch videos and read articles on the site. The issues can have major ramifications for how publishers and advertisers allocate their marketing budgets. The disclosures have spurred an industrywide conversation about how major technology companies like Facebook are measuring their audiences, particularly as they compete aggressively with television, and whether third-party measurement companies should be used to avoid potential conflicts.

Facebook said earlier this year that it would agree to an audit of information it provides to marketers through the nonprofit Media Rating Council, and it has offered new tools for marketers to gauge the visibility and success of ads.

This latest flare-up underscores why publishers and ad agencies have been pushing for more accountability and oversight of tech companies like Facebook and Google by outside companies, said Jason Kint, the chief executive of Digital Content Next, an online publishing industry group.

“This isn’t just a small media company or small seller of advertising that has a gap in their numbers,” Mr. Kint said. “This is one half of what we call the duopoly that’s capturing most of the growth in the media industry. There is absolutely a necessity for them to be held in check regarding the rest of the industry and independent bodies to make sure they’re delivering on what they say they’re delivering on.”