Advertising / Business Ethics / Marketing / Technology

Facebook’s Newest Problems: Advertising and Fake News

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Image Source: MKH Marketing

You may not have heard of Facebook’s recent advertising blunders, and this is probably because of the nonstop Election 2016 coverage. Since Facebook’s creation in 2004 and rapid growth afterwards, Facebook has rarely encountered major setbacks. In fact, the only significant setback in the social media giant’s history was the doubt it faced in the aftermath of its 2012 initial public offering, which saw many people doubting Facebook’s ability to transition to selling advertisements on a mobile platform. Since then, Facebook has thrived under its reputation as one of the most trusted sources for mobile advertising. Now, in the late stages of 2016, Facebook’s advertising methods are being questioned again, for the first time since those doubters were proved wrong in 2012.

Two months ago, Facebook faced heat after it was discovered that its own metrics overstated the amount of time viewers spent watching its videos. Facebook eased the criticism by reassuring investors and advertisers that the erroneous metrics were not the ones on which advertisers were buying. Facebook also made it possible for independent parties such as comScore and Integral Ad Science to verify the display-ad impressions. Despite this, Facebook’s failed metrics still affect advertisers’ investment decisions, as many questioned the ability to reliably measure video views at a time where videos are so popular. After all, if we can’t trust Facebook’s ad-measuring metrics, then whose can we trust?

Unlike the IPO setback in 2012, where doubters were soon proved wrong, Facebook seem to be moving backwards this time. On November 2nd, Facebook told company shareholders to expect a “meaningful” slowdown in advertising-revenue growth for 2017. On top of that, 3rd quarter reports show a decline in advertising revenue for Facebook. On November 9th, it got worse once more, as Facebook announced that it discovered four more flawed measurements related to consumer interaction with content, including undercounting and overcounting of video views and marketers’ posts. This time, vice president of global marketing solutions Carolyn Everson said, “We are doubling down on our efforts at third-party verification.” They are planning to form a Measurement Council, which will comprise of various marketers and advertising executives to investigate how to properly keep track of advertising views.

Even as Facebook continues its downward spiral, it can’t escape the election coverage either. For the past week, many Facebook users, investors, and others have been blaming Facebook for providing easy access to false news reports. And although CEO Mark Zuckerberg finds this idea to be “pretty crazy”, many claim Facebook aided Donald Trump to victory last Tuesday.

Zeynep Tufekci, an associate professor at the University of North Carolina, blames Facebook for the spread of false articles such as one that claimed Pope Francis endorsed Donald Trump, which was shared nearly one million times before the election. Facebook has since updated its Audience Network Policy to include fake news sites under the list of sites that it will not display ads on. Previously, the policy only stated it will not display ads in “sites that show misleading or illegal content”, but still put ads on fake news sites such as the one Tufekci refers to.

Given Facebook’s recent issues keeping track of advertisements, this further harms its reputation as one of the credible sources of advertising. While we do not yet know the effect of their recent ban of advertisements on fake news sites, we do know that their market shares have fallen more than 8% since last week’s report. Only time will tell whether Facebook can get their policies and metrics under control, but for right now it looks like Facebook is back in the position of defending itself, and this time I’m not so sure it can prove the doubters wrong.

 Sources:

http://www.wsj.com/articles/getting-the-measure-of-a-more-vulnerable-facebook-1479325416?mod=e2tw\

http://www.wsj.com/articles/facebook-says-it-found-more-miscalculated-metrics-1479303984

https://www.yahoo.com/tech/facebooks-fake-news-problem-whats-221305760.html

http://www.nytimes.com/2016/11/15/technology/google-will-ban-websites-that-host-fake-news-from-using-its-ad-service.html?_r=0

 

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