Facebook, which along with Google is responsible for about 60% of online advertisers’ spending, has scientifically built some of its astonishing success on misinformation, claiming just sealed court documents. By the way, this can be a problem for a business that generates more than 90% of its revenue from the sale of advertising.
In a nutshell, this class action lawsuit, first filed in 2018, claims that Facebook has massaged figures for “Potential Reach” – an estimate that Facebook gives its advertisers for the number of people who can see their ad – to give advertisers more money on the platform, all in the hope of getting the people achieved what Facebook promised. This documentation explained that some of Facebook’s leading buyers, including Sheryl Sandberg, chief operating officer, were well aware that the company had been exaggerating the number of eyeballs its advertisers could reach for years.
As first post by the Financial Times, the lawsuit alleges that when Facebook’s rank-and-file proposes internal corrections to these inflated figures, it is repeatedly bullied by senior executives on the grounds that their solutions will cut the company’s most important advertising revenue.
Thanks to these unsealed documents, we know how inflated some of the figures were. Here is an example: in 2018, Facebook tell its advertisers that it has a potential reach of 230 million adults across the U.S., out of the 250 million adults counted by U.S. census data that year. But according to a 2018 Pew research study, only about 68% (or 170 million adults) use the platform. Sandberg admitted in an internal email that “she has known about potential Reach issues for years.” But according to the submission, she repeatedly shot down the employee’s efforts to correct the figures.
Internally, employees acknowledge that the product invoices
itself as an estimate of how much “people“Your ad can reach, it’s at best an estimate of the number of accounts – including the innumerable numbers of False and duplicate. Some employees even reached the numbers in 2018, just to see what would happen if known duplicate accounts were cut out of Potential Reach, and a 10% drop in the numbers advertisers get is seen. Facebook chose not to cut them. When one of the product managers of the Potential Reach team later proposed to change the way they talked about these figures – such as replacing the word “people” with the word “accounts”, his proposal was dropped due to concern about the “significant impact it could have on Facebook’s advertising revenue. According to the case, the manager replied, ‘This is the revenue we should never have made, as it is based on incorrect data.’
G / O Media can get a commission
In many ways, this case reflects another sensational advertising package that hit the company in 2016, claiming that Facebook knowingly withhold some serious issues with the criteria for its video ads for the sake of more money from the video ad partners. In 2019, Facebook settled the claim for an amount of $ 40 million which, as others have pointed out, is quite a lot chum change to a company that earns tens of billions of dollars in advertising revenue per year.
And apparently Facebook hasn’t learned much from the slap on the wrist. As for the ongoing problems with Potential Reach, the case points out that the numbers Facebook advertises are making less and less sense, such as telling them that it could reach ‘100 million’ 18- to 34-year-olds across the country. Census data show that it is in fact only 76 million of them – and we know not everyone uses Facebook.
Both in court and so on his own website, the company argued that these metrics are meant to be interpreted as estimates, not as gospel. But internally, according to the new submission, the company conceded that Potential Reach was ‘probably the most important number’ that advertisers relied on when they first decided to put their advertising money on Facebook’s platform.
We have Facebook for comment, and will be updated here when we hear it.