Facebook, which along with Google accounts for about 60 percent of online advertisers ’spending, has been able to build some of its astonishing success on incorrect data, according to recently unsealed court documents. By the way, this can be a problem for a generating company more than 90% of their revenue from the sale of advertisements.
In short, this class action, which was re-filed in 2018, alleges that Facebook massaged “Potential Reach” figures – it estimates that Facebook gives its advertisers the number of people who could see its ad – to encourage advertisers to spend more money on the platform, all with hope to reach Facebook had promised. These files detail that some of Facebook’s top professionals, including chief operating officer Sheryl Sandberg, were fully aware that the company spent years exaggerating the number of eyeballs its advertisers could reach.
How reported for the first time for the Financial Times, the lawsuit claims that when Facebook bases proposed internal solutions for these inflated figures, top executives repeatedly repeated them on the basis that their solutions would reduce the company’s significant advertising revenue.
Thanks to these unsealed statements, we know to what extent some of these figures were inflated. Here’s an example: in 2018, Facebook he said its advertisers who had a potential reach of 230 million adults across the U.S., of the 250 million adults that were counted according to U.S. Census data that year. But according to a 2018 Pew Research Study, only approximately 68% (or 170 million adults) use the platform. Sandberg acknowledged in an internal email that he “had known the problems with potential scope for years.” But he repeatedly repeated attempts by employees to rectify those figures, according to the statement.
Internally, employees acknowledged that while products were being billed
as an estimate of how many “people“Your ad may arrive, it is, at best, an estimate of the number of accounts, including unexplained numbers of forgeries i duplicates. Some employees even posted the figures in 2018, just to see what would happen if known duplicate accounts were removed from potential reach and a 10% drop in the number of advertisers advertised was seen. Facebook chose not to cut them. When later one of the product managers of the potential outreach team suggested modifying the way they talked about these figures, such as, for example, replacing the word “people” with the word “accounts” – the his suggestion was rejected because of concerns about the “Impact it could have on Facebook’s advertising revenue. According to the lawsuit, the manager responded that “these are revenues we should never have earned considering they are based on incorrect data.”
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In many ways, this case reflects another high-profile advertiser process that came to the company in 2016 alleging Facebook deliberately withheld some serious issues with your video ad metrics in order to make more money from these video ad partners. In 2019, Facebook settled the claim for a sum of 40 million dollars which, as others have pointed out, is almost very large chump change to a winning company tens of billions of dollars in advertising revenue per year.
And apparently, Facebook didn’t learn much from this slap on the wrist. When it comes to ongoing issues with potential reach, the lawsuit points out that the numbers Facebook continues to give its advertisers make even less sense, like telling them it can reach “100 million” ages 18 to 34 at all the country. Census data show that in fact there are only 76 million of them — and we know not everyone uses Facebook.
Both of us in the courts yen your own place, the company argued that these metrics should be interpreted as estimates, not as gospel. But internally, according to new submissions, the company admitted that Potential Reach was “arguably the most important number” on which advertisers relied when deciding whether to place their money on the Facebook platform in first place.
We have contacted Facebook to comment and we will update here when we receive news.