Facebook will face pressure over the next few days over its ad-inflation scandal, but probably not much longer than that, said TheStreet's Jim Cramer. Newslook
SAN FRANCISCO — Facebook apologized for inflating the average time users spend watching videos.
The revelation that Facebook overstated a key metric angered advertisers and could undercut the giant social network's growing efforts to lure lucrative video advertising.
"The metric should have reflected the total time spent watching a video divided by the total number of people who played the video. But it didn’t – it reflected the total time spent watching a video divided by only the number of ‘views’ of a video (that is, when the video was watched for three or more seconds)," David Fischer, vice president of business and marketing partnerships, wrote in a Facebook post.
The Wall Street Journal reported Thursday that Facebook told advertising buying agency Publicis Media that the video metric had been overstated by between 60% and 80%.
A letter Publicis Media sent to clients, reviewed by The Wall Street Journal, said: "Two years of reporting inflated performance numbers is unacceptable."
The misstep could renew calls for an independent metric to understand what advertisers are getting for their money.
Facebook is competing with YouTube, Twitter, Snapchat and others for video advertising that commands higher rates. Facebook has embarked on a "video first" strategy, predicting video will soon consume the lion's share of attention of its 1.7 billion users. And it's making aggressive moves to get people to make and view more video. The reason: Facebook is pursuing television advertising budgets, which are larger than the ones allocated to social media and digital.
Fischer says Facebook noticed the mistake about a month ago.
"As soon as we discovered the discrepancy, we fixed it. We informed our partners and made sure to put a notice in the product itself so that anyone who went into their dashboard could understand our error," he wrote. "We have also reviewed our other video metrics on the dashboard and have found that this has no impact on video numbers we have shared in the past, such as time spent watching video or the number of video views. We want our clients to know that this miscalculation has not and will not going forward have an impact on billing or how media mix models value their Facebook video investments."
Nevertheless, the news has rattled investors. Facebook shares fell about 1% on Friday.
Cowen and Company analyst John Blackledge downplayed the significance of the incident.
"We have every reason to expect that Facebook treats its metrics and definitions as sacrosanct and that this is a case of clarification versus an attempt to mislead advertisers," Blackledge wrote in a research report. "Perhaps most importantly, we don't think this disagreement alters the rising importance of Facebook in advertiser budgets."
No comments:
Post a Comment