Is Facebook Losing Credibility With Advertisers?

Advertisers are increasingly losing patience with Facebook FB +0.49%.

The social network is facing a lawsuit accusing it of overstating the number of time users spent watching videos on its site by 150-900%. A review of around 80,000 pages of internal Facebook documents indicated that the Menlo Park, CA-based company knew about the inflated metrics in January 2015, more than a year before it was publicly disclosed. The documents were recently filed in conjunction with a 2016 federal lawsuit, which Facebook is fighting.



“This lawsuit is without merit and we've filed a motion to dismiss these claims of fraud. Suggestions that we in any way tried to hide this issue from our partners are false,” a Facebook spokesman said in a statement. “We told our customers about the error when we discovered it — and updated our help center to explain the issue.”

Though Facebook noted that the discrepancy over the time users spent on its site on didn’t affect customer bills, websites often tout the metric because it indicates to brands that their advertisements are more likely to get noticed. The case comes at advertisers push back against the dominance that Facebook and Alphabet's Google have in digital advertising where they control 57% of U.S. spending and account for 90% of the growth in the market.


“We’re increasingly holding Facebook to account to justify the levels of investment we are putting in them,” said Robin O’Neill, managing director of digital trading for GroupM, the largest digital media buyer, told Digiday in September. “We continue to press them to allow us to independently verify our metrics and operate in the real world. Facebook doesn’t operate with real-world metrics. I would urge every agency to hold Facebook to account and interrogate the data that comes out from them.”


A spokeswoman for GroupM declined to comment for this story.


Facebook has made other errors that cost advertisers money such as when it issued refunds in May 2017 after incorrectly claiming that people had clicked on their video ads even though they were just resizing the video carousel. A few months later, the company got in hot water again after an analyst noted that Facebook’s Adverts Manager tool promised it could reach 41 million 18- to 24-year-olds in the U.S., 10 million more than what Census data showed for the numbers of that demographic group.


Facebook has been addressing the concerns of advertisers and recently completed the first phase of a multi-phase metric audit with the Media Ratings Council. The company now has more than 40 measurement verification partners across a variety of data points that would interest marketers including viewability and mobile app measurements. In addition, Facebook also simplified its reporting, removing 20 redundant or little-used metrics.



Meanwhile, advertisers are becoming increasingly picky about where they spend their digital marketing dollars. Earlier this year, Procter & Gamble announced that it had cut $200 million in online spending in 2017, arguing that much of that money is wasted. Procter Chief Marketing Officer Mark Pritchard has called on platforms to address rampant digital ad fraud and asked Facebook and Google to allow independent verification of their ad measurements. P&G, the largest advertiser, yanked its ads on Google’s YouTube after its ads appeared alongside controversial content.