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Facebook's Stumbles Expose Flaws in Its Plan to Rule Advertising | WIRED

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DAVEY ALBA BUSINESS


11.27.16 7:00 AM

FACEBOOKS
STUMBLES
EXPOSE FLAWS
IN ITS PLAN TO
RULE
ADVERTISING

28/11/16 13:25

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THE INTERNET WAS

supposed to mean a whole


new world for the business
of advertising. Gobs of data
https://www.wired.com/2016/11/facebooks-stumbles-expose-flaws-plan-rule-advertising/

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Facebook's Stumbles Expose Flaws in Its Plan to Rule Advertising | WIRED

28/11/16 13:25

let advertisers become


wildly efficient in who they
target and how they
measure results.
Consumers also ostensibly
win: If youre in the market
want a quality winter coat,
the thinking goes, youre
not going to be annoyed if
you see an ad for one.
In this new world, Facebook
is on top. It knows so much
about its users that it can
deliver ads precisely
calibrated for virtually any
demographic you can
dream of, from suburban
grandmothers to
millennials living abroad.
But lately, Facebook has
faltered, exposing cracks in
the basic assumptions
about the superiority of
digital advertisingthe
business model on which so
much of the internet has
run for the past 20 years.
Last week, Facebook said it
found flaws in the metrics it
reported to advertisers
the measurements by which
those advertisers judge the
success of their ad
campaigns on the platform.
https://www.wired.com/2016/11/facebooks-stumbles-expose-flaws-plan-rule-advertising/

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Facebook's Stumbles Expose Flaws in Its Plan to Rule Advertising | WIRED

28/11/16 13:25

The company said it


overstated the reach of
Facebook Pages and Instant
Articles, as well as its count
of referrals to apps from
ads. This admission of
miscounting came just a
few months after Facebook
said it had inflated how
much time on average
viewers spent watching
video ads for two years.
Facebook has promised
more transparency. But in
media and advertising
circles, some critics are
starting to ask whether
theyve been spending their
money wisely on Facebook.
Were they duped into
making costly business
decisions based on wrong
information? Yes, Facebook
is still an enormously
powerful platform. Close to
a fifth of the worlds
population checks the social
network every day, and all
those eyeballs are
incredibly valuable to
advertisers and publishers.
But the revelation that it
exaggerated its own reach
points to real flaws in the
https://www.wired.com/2016/11/facebooks-stumbles-expose-flaws-plan-rule-advertising/

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Facebook's Stumbles Expose Flaws in Its Plan to Rule Advertising | WIRED

28/11/16 13:25

narrative about what


Facebookand indeed,
digital advertising on the
wholecan accomplish.

Miscounting Metrics
Facebook says it has an
incredibly robust system
that offers up to 220
different ways to measure
how well advertisers ads
do. But Facebooks sterling
reputation has left
advertisers all the more
confounded by how
Facebooks miscounts could
have happened in the first
place. Facebook is
supposed to be the best of
the best, the cream of the
crop, with advertisers
spending good money with
them, says Brian Wieser, a
media industry analyst at
Pivotal Research. Theres
an expectation that you
dont get this thing wrong.

https://www.wired.com/2016/11/facebooks-stumbles-expose-flaws-plan-rule-advertising/

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Facebook's Stumbles Expose Flaws in Its Plan to Rule Advertising | WIRED

28/11/16 13:25

And yet Facebook did. It


overstated app referrals by
6 percent on average by
counting not only posts that
directed traffic back to the
app makers website or app
but also clicks to view
photos or video that kept a
user inside of Facebook.
Facebook Pagesthe pages
brands maintain as their
home bases on the site
double-counted repeat
visitors, leading to greatly
exaggerated estimates of
the size of their audiences.
(The company said page
owners should be prepared
to see their 28-day reach
fall by 55 percent.)
Facebook also said that, due
to a math error, it
estimated audiences were
spending 7 to 8 percent
more time reading fastloading Instant Articles
than they really were.
The company doesnt say
exactly how it came to
discover these new
discrepancies, pointing to
https://www.wired.com/2016/11/facebooks-stumbles-expose-flaws-plan-rule-advertising/

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Facebook's Stumbles Expose Flaws in Its Plan to Rule Advertising | WIRED

28/11/16 13:25

bugs in the system. But


Wieser says its likely that
Facebook looked into the
issue more deeply after
finding the mistake in
counting that video metric
back in October. Pick your
analogy or theory, Wieser
says. The cockroach
theory, where you see one
somewhere, then you see
more, and say, geez, this
must be something
systemic. Or the Comey
analogy: the problem was
brought up then seemed to
be settled, but then it comes
up again. Whatever the
case, he says, the mistakes
definitely amount to a
sackable offense.
(Facebook says it has
established what its calling
a measurement council to
respond to advertisers
concerns.)
But this still doesnt get
at what Wieser sees as the
bigger problem: Facebook
grading its own
homework. You cant get a
report on Facebook metrics
from anywhere elseonly
from Facebook. And
https://www.wired.com/2016/11/facebooks-stumbles-expose-flaws-plan-rule-advertising/

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Facebook's Stumbles Expose Flaws in Its Plan to Rule Advertising | WIRED

28/11/16 13:25

Facebook defines what


those metrics are. In the
wake of its most recent
debacle, the company did
pledge to work with thirdparty industry reviewers,
something Rob Norman,
chief digital officer of
powerhouse media buyer
GroupM, applauds. But
these reviewers can only
retroactively verify
Facebooks metrics. They
cant get an independent
view into the data
themselves.
Norman wants to be able to
analyze the activity of
advertisers and their
competitors on Facebook as
it already can on most other
media, including TV and
print. On Facebook,
advertisers can see whether
a video has been watched
and how long its been
viewed for. But they still
cant get any information
on, say, how often a brands
rival runs video ads on
Facebook. In Normans
view, the information most
useful to ad buyers is still
not the information
https://www.wired.com/2016/11/facebooks-stumbles-expose-flaws-plan-rule-advertising/

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Facebook's Stumbles Expose Flaws in Its Plan to Rule Advertising | WIRED

28/11/16 13:25

Facebook is choosing to
release. I genuinely dont
know whether, if we had the
information we wanted, we
would be spending more,
the same, or less money on
Facebook, Norman says.
But what I do know is that I
would be able to look at
Facebook advertising in the
broader context of all
advertising.
The data digital platforms
provide to advertisers is the
mediums key selling point.
To be fair, Norman says he
never thought Facebook
was being intentionally
misleading by misreporting
its metrics. But when
Facebook as a gatekeeper
doesnt seem to be offering
the right data in the first
place, the pitch for digital
advertising becomes less
convincing.

Data, Data, Data


Still, its impossible to
imagine running a digital ad
campaign today without
running some part of it on
Facebook. Trying to get
https://www.wired.com/2016/11/facebooks-stumbles-expose-flaws-plan-rule-advertising/

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Facebook's Stumbles Expose Flaws in Its Plan to Rule Advertising | WIRED

28/11/16 13:25

elected? You can target ads


for specific congressional
districts. Selling
mattresses? Facebook
knows which users just
moved. You can target
people for their tastes, too:
restaurant ads for Italian
food connoisseurs, or
furniture ads for fans of
mid-century modern.
Because your history,
preferences, location, and
network of friends are all
part of Facebooks data set,
how could ad targeting not
work? The numbers make
the company look infallible:
in 2015, Facebook pulled in
$17 billion in ad revenue, a
49 percent increase
compared to one year ago.
It boasts 1.8 billion monthly
usersmore than the
population of China.
Targeting is at the core of
what Facebook advertising
offers. And the narrower
the targeting gets, the more
expensive Facebook
charges for an ad.
But what if the problem

https://www.wired.com/2016/11/facebooks-stumbles-expose-flaws-plan-rule-advertising/

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Facebook's Stumbles Expose Flaws in Its Plan to Rule Advertising | WIRED

28/11/16 13:25

isnt the technology but the


way Facebook conceives of
consumers themselves?
Facebook somehow
contemplates a world
where, if I owned a
skateboard company, I only
show a skateboard ad to
men aged 18 to 25, says
Benjamin Edelman, a
Harvard Business School
associate professor who
studies online advertising.
So all the other customers
the grandma who wants
to buy a skateboard for her
grandson, the 40-year-old
who wants to relive his
childhoodId totally miss
them. Whats the point?
Its a shock that so many
advertisers buy into
Facebook when it only
seems to play to peoples
worst preconceptions of
who customers are and

https://www.wired.com/2016/11/facebooks-stumbles-expose-flaws-plan-rule-advertising/

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Facebook's Stumbles Expose Flaws in Its Plan to Rule Advertising | WIRED

28/11/16 13:25

whos interested in what,


Edelman says. Those
preconceptions might lead
to unsophisticated and
inflexible targeting that
fails to address other
markets advertisers hope to
reach. They might even, as a
recent ProPublica
investigation found,
promote racial bias.
Targeting does make sense
for somesay, a local
business owner who wants
to let her neighbors know
she just opened a new shop
in town. But what about the
multinational consumer
goods companies of the
world? Youll buy Johnson
and Johnsons household
products if the store across
the street from where you
live carries them, Edelman
argueswhether or not J&J
decided to take out ads on
Facebook.

https://www.wired.com/2016/11/facebooks-stumbles-expose-flaws-plan-rule-advertising/

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Facebook's Stumbles Expose Flaws in Its Plan to Rule Advertising | WIRED

28/11/16 13:25

Facebook may or may not


be the best place for
advertisers to spend their
dollars. Either way, many in
the ad industry say its time
to retire the idea that
digital advertising is closer
to perfect than other kinds
of advertising. The idea
that digital was this perfect
nirvana was a view that was
never reflected in reality,
says Wieser. If some
advertisers were surprised
that Facebooks metrics
werent perfect, he says,
they werent paying close
enough attention. After all,
the very idea of what counts
as success in digital
advertising is still in flux.
Just look at how different
tech companies disagree on
what to call a video view.
Does a partially obstructed
video view count? How long
does a user need to watch
it? Should they get to the
end of the clip? And what
about ad fraud caused by
software like ad blockers?
Ad-supported digital
media covers an almost
countless number of
https://www.wired.com/2016/11/facebooks-stumbles-expose-flaws-plan-rule-advertising/

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Facebook's Stumbles Expose Flaws in Its Plan to Rule Advertising | WIRED

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variations, many of which


bear no resemblance to
anything that came before,
says Randall Rothenberg,
president and CEO of the
Interactive Advertising
Bureau, an industry trade
group.
Despite all that uncertainty,
ad buyers are hardly ready
to abandon Facebook. No
matter how unclear the
metrics of success on the
platform really are,
whether through
miscounting or simply lack
of a long enough track
record, advertisers dont
feel they can afford to wait
to figure it out before
committing their dollars.
The pendulum has swung
about as far as it can where
you can lose your job for
not buying ads on
Facebook, but you keep
your job for not buying ad
space in The New York
Times, Edelman says. If it
does start to swing back, he
says, it may be due to
incidents like reporting bad
numbers to advertisers
the real customers who
https://www.wired.com/2016/11/facebooks-stumbles-expose-flaws-plan-rule-advertising/

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Facebook's Stumbles Expose Flaws in Its Plan to Rule Advertising | WIRED

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keep the social network in


business. Facebook may be
powerful. But as these
cracks show, its not
foolproof.

https://www.wired.com/2016/11/facebooks-stumbles-expose-flaws-plan-rule-advertising/

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