Business

The Way Facebook Measures Ads Is Likely Misleading Business Partners, Perpetuating Ad Dominance

Facebook overstates the number of people that are able to see advertisements on its site, according to an analyst, meaning it is likely misleading business partners who seek the platform for marketing purposes.

An advertising executive for the social media company says it can reach 41 million people ages 18 to 24 years old in the U.S., reports CNBC, which cites Brian Wieser of Pivotal Research Group. But, according to the U.S. Census Bureau, there are only 30,843,811 people in that age group as of 2016. Facebook also allegedly claims it can reach 60 million U.S. males and females ages 25 to 34, even though the census shows that there are 44,677,243 in that generational span.

Facebook says its numbers are just an estimation used to give businesses a sense of how many people their ads could potentially reach before they decide on publishing an ad on the platform, and it’s not billable. The tech company states that it only charges advertisers based on the amount of people the ads truly reached.

“Reach estimations are based on a number of factors, including Facebook user behaviors, user demographics, location data from devices, and other factors,” a spokeswoman for Facebook told The Daily Caller News Foundation. “They are designed to estimate how many people in a given area are eligible to see an ad a business might run. They are not designed to match population or census estimates. We are always working to improve our estimates.”

Businesses looking for publicity on one of the most widely visited social media platforms, and websites in general, may be persuaded by Facebook’s numbers, which are starkly different than the actual amount of people in the U.S.

Facebook has been in hot water before for its advertising tactics and metrics. (RELATED: Facebook’s Path To Ad Dominance Comes With A Litany Of Allegations)

The company was forced to apologize in September for over-calculating the average viewing time for video ads. Its metric that gauges the average time users spent watching videos was skewed because it would count any viewing over three seconds. This artificially inflates the number because, as many users know, many videos will automatically play for an equally brief time when scrolled over. The discrepancy could have conceivably charged advertisers an unfair amount since many of the contracts are based off of view count or view duration.

David Fischer, vice president of business and marketing partnerships for Facebook, announced in a blog post that the error “has not and will not … have an impact on billing or how media mix models value their Facebook video investments.” Regardless, businesses were likely provided with false data that could have affected decision-making processes.

After the revelation, the company said it will restructure and upgrade its marketing and overall video content metrics through a number of different means, including “Increased Third-Party Verification” and “Regular and Clearer Communication on Metrics.”

Nevertheless, all of this may contribute to its digital ad revenue dominance relative to every other company except Google. The two tech powerhouses essentially have a “duopoly” over this increasingly important area of profit, making $80.8 billion and $36.3 billion in 2017, which is roughly half of all global ad revenue. (RELATED: Facebook And Google Dominate More Than Just Ad Revenue)

The two tech conglomerates combined account for roughly 90 percent of the growth in new advertising revenue, according to market research company eMarketer, dwarfing all other corporations in the industry.

Some organizations and business are so perturbed by this massive, dual control that they are petitioning the public and lawmakers to do something about it. With backing from media giants like The New York Times and The Wall Street Journal, the coalition known as the News Media Alliance (NMA) is formally asking federal lawmakers to provide them an exemption from antitrust regulations, so they can collectively negotiate with the two tech conglomerates. NMA, which represents more than 2,000 newspapers in the U.S., says that due to competition rules on the books, they are are not allowed to work together, thus indirectly enabling an ad revenue hegemony to transpire and persist.

A British media outlet launched a petition in April to “stop” Google and Facebook from “destroying journalism” by hogging digital ad revenue from traditional news publishers.

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