Facebook Allegedly Boosted Ad Reach Estimates to Gain Bigger Profits


Facebook is accused of overestimating the reach of its ads in order to earn a bigger profit. To make matters worse, senior executives at Facebook reportedly knew that this was happening, and did nothing to change it.

Facebook Apparently Included Duplicate and Fake Accounts in Ad Estimates

A report by the Financial Times brought attention to the unsealed documents surrounding a 2018 class-action lawsuit, which claims that Facebook has been providing advertisers with an inflated figure of how many users their ads could reach.

When marketers purchase ads on Facebook, the platform shows them the campaign’s “potential reach,” otherwise known as an estimate of how many users will likely see their ads. The lawsuit claims that Facebook knowingly inflated the potential reach of ads, with one product manager telling senior executives that these estimates were “deeply wrong.”

According to the lawsuit, an employee supposedly suggested that Facebook fix the estimation issue, but Facebook’s higher-ups rejected the change, citing that the “revenue impact” would be too “significant.”

Facebook COO, Sherly Sandberg, allegedly acknowledged the problem in an internal email in 2017, and apparently brushed it off. One Facebook employee even reportedly pondered: “how long can we get away with the reach overestimate?”

The lawsuit accuses Facebook of including fake and duplicate accounts in its potential reach estimates, and apparently, Facebook made “a deliberate decision” to do so. In 2018, the results of a Facebook analysis showed that removing duplicate accounts from estimates would cause a 10 percent drop in potential reach numbers.

Facebook fired back at these claims, defending its supposedly inflated estimates by stating that these metrics have nothing to do with the actual performance of ads. The platform went so far as to imply that advertisers shouldn’t depend on the accuracy of this metric.

This perspective contradicts the statement that Facebook displayed on an internal document, which notes that potential reach is ”arguably the single most important number” for advertisers to consider.

A Facebook spokesperson told the Financial Times that “these allegations are without merit and we will defend ourselves vigorously.” The platform is already facing the backlash of its ban on news in Australia, and this potential scandal just tops off Facebook’s tumultuous week.

How Will Advertisers React?

It’s not uncommon to see Facebook at the center of controversy. This report may foster further distrust among advertisers, and may even drive businesses away from Facebook altogether.

Facebook changed the way it calculates its potential reach in 2019, but it’s unclear whether this truly solves the problem alleged by this lawsuit.


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