Facebook accused of inflating its reach among young adults
As Facebook grapples with the cascading fake news issue, the company is also increasingly facing charges from advertising groups that it is claiming more young adult users than the Census Bureau says exist.
Analyst Brian Wieser of Pivotal Research raised that and other questions about Facebook's claims to advertisers in a report in early September.
Now the Video Advertising Bureau, a trade group for cable and broadcast networks and their sites, has a follow-up study saying that the internet giant is over-counting non-existent 18- to 24-year-olds in all 50 states.
Collectively, Wieiser and the VAB say, the company's claimed reach exceeds census estimates by a third in the 18-24 demographic and 80 percent among 25-to-34-year-olds
This is not Facebook's first misadventure with ad metrics. A year ago September, the company conceded that over a period of two years it had miscalculated and thus overstated the typical time that users were spending engaged with its videos.
I chatted with a Facebook spokesman, who explicated the company's cryptic rejoinder to Wieser that its estimated reach numbers "are based on a number of factors" and do not necessarily correspond to census data, itself an estimate.
Those young users Facebook counted could include people from other countries registering in the United States and some who misreport or don't update their age, he said. Also the reach figure would pick up tourists and other visitors.
I'll buy that there are plenty of people in New York City (and a few other destinations) at a given time who do not live there. But I am highly dubious that addition would cover the gap the critics have identified.
Sean Cunningham, president and CEO of the Video Advertising Bureau, told me that Facebook has promulgated a number of "trust-me metrics ...There is a pattern. All of them are about giving the appearance of being bigger ... pushing the idea that they are ubiquitous."
The accusation is not that Facebook is overcharging. Its ads are generally placed by electronic auction, and the price is based on the numbers (views and a watch-to-completion factor) for a given ad.
But Cunningham said that the inflated claims for desired demographic groups are meant to influence ad buyers who are considering the scale of Facebook purchases compared to their broadcast and cable budgets.
His members would like to see Facebook using the same exacting third-party verification that is expected in the TV industry, Cunningham said. "Data innovation is a big part of what's going to be good about the future of advertising," he added, "but we need an equal view where everyone is looking at the same set of data."
The Facebook spokesman said that the company is partnering with both Nielsen and comScore to develop new and more exact measures of digital audience reach. More is on the way, he said, as well as a more detailed explanation of the reach claims.
I had the impression that the current controversy is focused on national advertisers and big brands. But Cunningham said his membership includes Comcast and other cable system owners who see the same dynamic at work in local market competition for ad share.
As I and others have been reporting for some time, Facebook and Google's growing dominance in local advertising is the biggest factor in ad revenue declines at newspapers and magazines. Those placements make publications less competitive in selling ads to their digital sites and often are financed by reducing print schedules.
The questions about Facebook's claimed reach take place against a broader background of concerns about ad fraud in digital buying and pricing.
Just last week, the Financial Times said an internal study had found bogus listings for ft.com ads on a number of ad exchanges. It urged clients to step up verification to insure against fraudulent placements.
At the very least, as in the news domain, Facebook's growing pains in advertising, both metrics and placements next to inappropriate content, are surfacing at a brisk rate and require regular remedial action.
The worse case for Facebook is that hits to its credibility will slow the astronomic rates of ad revenue growth that have kept the company a darling among investors even as it has grown from big to huge.