Facebook, which, along with Google, accounts for about 60 percent of advertisers’ online spending, has knowingly built some of its amazing success on incorrect data, according to current sealed documents. In fact, this can be a problem for a generating business over 90% from its advertising sales revenue.
In short, this process of collective action, which was originally filed back in 2018, claims that Facebook massaged the figures for “Potential Reach” – estimates that Facebook offers advertisers for the number of people who could see their ad – to get advertisers to spend more money on the platform, all in the hope of reaching the people that Facebook had promised. These submissions detail that some of Facebook’s most important members, including chief operating officer Sheryl Sandberg, were fully aware that the company spent years exaggerating the number of eyes that advertisers could reach.
As first reported by the Financial Times, the lawsuit alleges that when Facebook’s rank and file proposed internal remedies for these inflated figures, senior executives repeatedly eliminated them on the grounds that their solutions would reduce the company’s very significant advertising revenue.
Thanks to these unsealed deposits, we know how inflated some of these figures were. Here is an example: in 2018, Facebook said advertisers that had a potential coverage of 230 million adults in 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 admitted in an internal email that he “knew for years about the problems with Potential Reach.” However, she repeatedly overturned the employee’s attempts to correct these figures, according to the file.
Internally, employees have acknowledged that while the product invoices
as an estimate for how many „people“Your ad could reach, at best, an estimate of the number of accounts – including the unspecified number of accounts. false and duplicate. Some employees even ran the numbers 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 was noticed. Facebook has chosen not to reduce them. When one of the product managers on the Potential Reach team later suggested changing the way they talked about these numbers – such as replacing the word “people” with the word “accounts” – this suggestion was rejected out of concern. on the “significant”. “The impact it could have on Facebook’s advertising revenue. According to the lawsuit, the manager replied that “the income we should never have made, given that it is based on wrong data.”
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In many ways, this case reflects another profile advertising suit that hit the company in 2016, accusing Facebook knowingly retained some serious issues with the values for his video ads, for the sake of extracting more money from those video ad partners. In 2019, Facebook settled the $ 40 million lawsuit, which, as others have pointed out, is quite large. chump change to a winning company tens of billions dollars in advertising revenue per year.
And apparently, Facebook didn’t learn much from that slap on the wrist. When it comes to ongoing issues with Potential Reach, the lawsuit points out that the numbers Facebook continually gives advertisers make even less sense, as if telling them it can reach “100 million” from 18 to 34 million. years across the country. Census data show that it actually exists only 76 million of them – and we know not everyone uses Facebook.
Both in court and on own site, the company argued that these values are meant to be interpreted as estimates, not gospel. But internally, according to new records, the company acknowledged that Potential Reach was “probably the most important number” on which advertisers relied when they decided to put advertising money on the Facebook platform in the first place.
We contacted Facebook for comments and we will update here when we hear.